comp time, paid out

[kenmoremmm]

i work for a small engineering firm (<20 people). i'm basically #2 on the totem pole, below only the president.

the office manager/co-owner always laments about paying out comp time. i am curious as to why this is. for hours worked >40/week, we accrue comp time - earned at a 1:1 ratio either in straight pay or vacation time.

since we're an engineering firm, vacation pay doesn't happen much. so, most people end up getting paid out at the end of the year.

i never understand why it's a bad thing for my company to pay out comp time. they have already billed those hours out to our clients, so it seems like, if anything, they make more and more money (% of profit) from each hour worked in excess of 40/week.

at my old firm, we would get 1.5x pay for 40-60 hours and 2x pay for 60+. they always said that since overhead stayed the same for anything over 40 hours, that they passed on the benefits to the employees. makes sense to me.

[Sibley]

They're co-owner. Which means the more money left over, the more money they get probably.

Paying out comp time likely means less money they're able to take home.

[dandarc]

Yep. A lot of firms love to basically abuse salaried employees - if you can get those 20 extra hours every week worked for free, more money for the owners to keep.

[kenmoremmm]

but it's company policy that they will pay out the comp time. so, why not encourage people to work as many hours possible in the year, rather than saying "oh, please use your comp time as vacation time for this last week of the year"? there are less billable hours that way.

[Cpa Cat]

Well, engineers are exempt employees under FLSA as I understand it, so technically, it's probably legal for the employer not to pay overtime or comp time at all.

The owner of the firm would make more money if you stopped paying out comp time.

But if it's standard in the industry to pay overtime or comp time, then it's unlikely he would maintain a high quality labor pool.

He prefers them to use vacation time during the last week of the year, because it's likely that you don't have many jobs booked and having people use them as vacation is not an additional cash expense. Paying it out is an additional cash expense that affects cash flow. He may dislike having his cash flow cratered at year end.