- Time off with pay in lieu of overtime pay for irregular or occasional overtime work (defined as work that is not part of an employee’s regularly scheduled administrative workweek); or
- When permitted under an agency’s flexible work schedule program, time off with pay in lieu of overtime pay for regularly scheduled or irregular or occasional overtime work.
Under the rules established by the Office of Personnel Management, the head of an agency (or designee) may, at the request of some employees, grant compensatory time off from an employee’s tour of duty instead of overtime payment for an equal amount of overtime work. Compensatory time may be requested by employees who are covered by the Fair Labor Standards Act (FLSA), general schedule employees who are exempt from the FLSA and earn less than the maximum pay of a GS-10, and Federal wage system employees. An agency may not require the above listed employees to take compensatory time in lieu of overtime pay. However, management can direct GS employees earning rates of basic pay greater than a GS-10, step 10, who are exempt from FLSA to take compensatory time off in lieu of overtime.
There is no limit on the maximum number of hours of compensatory time an employee may accumulate. However, compensatory time must be used by the end of the 26th pay period after it is earned or it will be paid to the employee at the overtime rate at which it was earned.
When a DoD employee separates or transfers to another Military Department or Defense agency (i.e., from Army to Navy or from Navy to Air Force), unused compensatory time balances shall be paid at the overtime rate at which it was earned. Employees who change positions but remain within the same Military Department or Defense Agency (i.e., Army to Army or Navy to Navy) will have their compensatory time balance transferred with them.