Instead of giving overtime pay, some companies reward employees who work extra hours with time off. Although this practice, known as 'giving comp time', is legal under the Fair Labor Standards Act, there are certain limits to how it can be granted. First of all, comp-time can only be given to employees who are classified as non-exempt under the Fair Labor Standards Act, or FLSA (F-L-S-A). Employees who are paid by hourly wage and employees who work in the public sector are automatically considered to be non-exempt. When giving comp time, companies must allow employees time off that's equal to one and one-half hours for each hour of work that's considered overtime. Employees are limited to 240 hours of comp time per year, except those who work in public safety can accrue up to 480 hours of comp time. If an employee has unused comp time at the time of termination of employment, the employee must be paid for the unused time. Keep in mind that comp time can only be given if it's offered by the employer and the employee agrees to accept it. Generally, private employers aren't required or prohibited from giving exempt employees, those not covered under FLSA regulations, comp time. If they choose to do so, they may provide it on any basis, not necessarily one-and-one-half hours off for every overtime hour worked.