17-2: Compensatory time

Effective: July 1, 1994
Revised: April 29, 2026
References: DHRM R477-7, DHRM R477-8, Utah Code 63A-17-502, GASB Statement No. 101

Purpose

This policy outlines how compensatory time is managed and accounted for.

Definitions

Agency – Any agency, board, bureau, commission, office, department, or other administrative subunit of state government. This definition includes the executive, legislative, and judicial branches.

Compensatory (comp) time – Paid time off earned by an employee for working over their overtime base.

FLSA exempt (exempt) employees – Employees who are exempt from the Fair Labor Standards Act and aren’t required to be paid overtime.

FLSA non‐exempt (non-exempt) employees –Employees to whom the Fair Labor Standards Act applies and are paid overtime when they work more than 40 hours in a designated workweek.

GovOps – The Department of Government Operations.

Leave allocation – The Vantage Payroll system’s event accounting matrix.

Overtime – Hours an employee works over their overtime base.

Overtime base – Overtime bases vary based on employee type:

Exempt employees: 80 hours in a pay period.
Non-exempt employees: 40 hours in a workweek.

Pool – A cost center where costs are pooled for a specified event. Funds are taken out of the pool to pay for the event when it occurs. The mandatory pool calculations are performed through Vantage Payroll and accounting transactions are sent to Vantage Financial for posting.

State Finance – The GovOps Division of Finance.

Policy

A – Employees receive comp time

1 – Non-exempt employees receive comp time at the 1.5 rate

1a – Non-exempt employees receive 1.5 times their overtime hours when they work more than 40 hours in a designated workweek. These hours are calculated by Vantage Payroll.

1b – Non-exempt employees can choose to receive overtime pay or to accrue comp time for the overtime hours when they are hired. The employee may request to change their delegation at any point.

1c – Non-exempt employees can’t use comp, sick, or annual leave in a workweek if they work 40 or more hours.

1c.1 – Supervisors and payroll coordinators must ensure that non-exempt employees don’t enter sick or annual leave on their timesheet if they work 40 or more hours.

1d – See the following example of a non-exempt employee’s work schedule:

Non-exempt	Week 1	Week 2	Pay period 1
Worked	36	46	82
Sick	4	0	4
Total	40	46	86
Overtime hours	0	6	6

1d.1 – The employee can choose to accrue 9 hours of comp time (6 overtime hours * 1.5) or be paid out 9 hours at their regular payrate.

2 – Exempt employees receive comp time at the straight-time rate

2a – Exempt employees receive comp time at straight time for all hours worked over 80 hours in a designated pay period.

2b – Exempt employees must use their comp time by the agency’s annual deadline; otherwise, the time is lost unless an exception is granted per DHRM Rule 477-8-6.

2c – Exempt employees can’t use comp, annual, or sick leave in a pay period if they work 80 or more hours.

2c.1 – Supervisors and payroll coordinators must ensure that exempt employees don’t enter comp, sick, or annual leave on their timesheet if they work 80 or more hours.

2d – See the following example of an exempt employee’s work schedule:

Exempt	Week 1	Week 2	Pay period 1
Worked	36	46	82
Comp time earned			2

2d.1 – The employee accrues 2 hours of comp time.

B – Vested comp time must be in a pool

1 – State Finance is responsible for maintaining the Vantage Payroll functions required to calculate the comp pool amounts.

2 – Every agency must have a pool for the vested portion of comp hours for non-exempt employees. This pool is identified as a liability by department or agency number.

C – Employees comp time must be accounted for

1 – Accounting for non-exempt employees comp time

1a – When non-exempt employees earn comp hours and select to accrue comp time, the comp hours are coded into Vantage Payroll. Vantage Payroll performs the following calculation: (comp hours earned) * (pay rate) * (1 + comp additive rate).

1b – The calculated amount is charged in Vantage Financial to the agency’s budget according to the coding block(s) in the employee’s time sheet for the pay period. The offset entry adds the calculated amount to the comp pool liability.

1c – When non-exempt employees use accrued comp time, the payroll costs for hours used are disbursed from the comp pool. The associated fringe benefit costs will not be disbursed from the comp pool. They will be expensed to the agency’s budget and allocated to the employee’s coding block in Vantage Financial in the same manner as their regular pay.

1d – When non-exempt employees choose to get paid for overtime instead of accruing comp leave, the comp pool is not affected and this section of policy does not apply.

2 – Accounting for exempt employees comp time

2a – When exempt employees earn comp time, the hours are recorded in Vantage Payroll, but an expenditure transaction isn’t posted to Vantage Financial because exempt employees’ comp hours are not vested and don’t have a financial value. The comp hours must be used by the employee before the end of the agency’s annual deadline, or the hours are lost.

2b – When exempt employees use comp time hours and the agency doesn’t use leave allocation, the amount paid to the employee for comp hours used are charged in Vantage Financial to the employee’s default budget and the related fringe benefits are allocated to the coding block(s) in the employee’s time sheet for the pay period.

2c – When exempt employees use comp time hours and the agency uses leave allocation, the hours paid and associated fringe benefits are allocated to the coding block(s) in the employee’s time sheet for the pay period.

2d – When circumstances justify exempt employees to be paid out for comp time hours, the amount paid to the employee and the fringe benefits related to the comp hours in that pay period are distributed to the Vantage Financial coding block for the employee’s default budget.

D – Agencies choose their comp additive rate

1 – Agencies may submit a comp additive rate to State Finance. This rate is used to estimate the potential salary increases when comp time is used.

1a – If an agency doesn’t submit an additive rate, then a default additive rate of 7% will be used.

2 – Agency additive rates can be changed any time throughout the year by submitting a ticket the State Finance payroll team at [email protected].

E – Liability is compared with the comp pool balance at year-end

1 – The year-end liability is calculated by State Finance from the vested comp hours by each employee within an agency, using the following formula: (accumulated comp hours) * (employee pay rate) * (1 + comp additive rate).

2 – Agencies must compare the unused balance in the pool to the actual liability to determine their over- or under-funded liability.

3 – If the agency’s liability is underfunded or in a deficit, the agency must either fund the underfunded amount at or before the fiscal year-end or carry over their pool deficit into the new year and have the State Finance payroll team increase its comp additive rate to cover the deficit.

4 – If an agency’s liability is overfunded, the overfunded portion is carried into the new year, and the agency may choose to reduce its comp additive rate.