Compensatory time off: overtime must be paid to the “intern”

Compensatory time off is often misunderstood or abused by employers

fictional background

Mary worked a year as an intern in California. The contract specified an hourly rate and provided paid time off. [PTO.] Mary did not use her PTO, but instead relied on “Compensatory Time Off” [CTO]that is, time off was taken instead of overtime pay.

In the end, Mary was told that her PTO would not be paid due to a ‘use it or lose it’ policy. Her employer told Mary that the PTO awarded was not a company ‘policy’, but a ‘component of the internship’. That sounded strange to Mary.

The “intern” contract also stated that Mary was exempt from overtime and would not be paid for overtime.

Mary wanted to know: Did your status as an international student intern make any difference to your PTO rights?

Legal Analysis

PAID TIME OFF IS DUE AS EARNED SALARY.

paid time off [PTO] it is the equivalent of earned wages, and must be paid immediately upon termination of employment. The PTO can be capped, but it cannot be lost, ie the “use it or lose it” policy is illegal in California.

COMPENSATORY TIME OFF MUST MEET STRICT CALIFORNIA RULES.

compensatory time off [CTO] must comply with California conditions: Labor Code Section 204.3:

— Employee requests CTO, in writing, in lieu of overtime.

— The employee is regularly scheduled to work not less than 40 hours in a workweek.

— There is a written agreement for CTO before work is done.

— Accrued CTO must be paid when the employee terminates employment.

Also note that the CTO should be awarded not just for the hour worked over 8 in a day, but for the overtime rate: 1 hour worked = 1.5 hours off up to 12 hours, and 2 hours off over 12 per day.
INTERNS ARE PEOPLE IN TRUE LEARNING ROLES WITHOUT PRODUCTIVITY DEMANDS.

A true intern, usually as part of an academic requirement and approved sponsorship, is not paid. As an intern, Mary’s job duties are under continuous mentoring and supervision, with no discretion to decide matters of importance to the company. Bottom line: Mary is not exempt. Mary should demand the extra time from her and the equivalent of unused CTO money. She likely has a claim for the additional 1/2 hour fee even for every hour she was allowed to take off at the hourly base pay.