29 C.F.R. § 553.27

Payments for unused compensatory time

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(a) Payments for accrued compensatory time earned after April 14, 1986, may be made at any time and shall be paid at the regular rate earned by the employee at the time the employee receives such payment.

(b) Upon termination of employment, an employee shall be paid for unused compensatory time earned after April 14, 1986, at a rate of compensation not less than—

(1) The average regular rate received by such employee during the last 3 years of the employee's employment, or

(2) The final regular rate received by such employee, whichever is higher.

(c) The phrase last 3 years of employment means the 3-year period immediately prior to termination. Where an employee's last 3 years of employment are not continuous because of a break in service, the period of employment after the break in service will be treated as new employment. However, such a break in service must have been intended to be permanent and any accrued compensatory time earned after April 14, 1986, must have been cashed out at the time of initial separation. Where the final period of employment is less than 3 years, the average rate still must be calculated based on the rate(s) in effect during such period.

(d) The term “regular rate” is defined in 29 CFR 778.108. As indicated in § 778.109, the regular rate is an hourly rate, although the FLSA does not require employers to compensate employees on an hourly basis.

[52 FR 2032, Jan. 16, 1987; 52 FR 2648, Jan. 23, 1987]
Notes of Decisions
Cited in 4 cases (2 in the last 5 years), 1998–2024 · leading case: Christensen v. Harris Cnty., 529 U.S. 576 (2000).
Christensen v. Harris Cnty., 529 U.S. 576 (2000). · cites it 3× “§ 207( o )(3)(B); 29 CFR § 553.27 (a) (1999). Thus, under the FLSA an employer is free to require an employee to take time off work, and an employer is also free to use the money it would have paid in wages to cash out accrued compensatory time.”
Moreau v. Harris Cnty., 158 F.3d 241 (5th Cir. 1998). “Plaintiffs did not address the jurisdictional issue in their briefs.”
Giallanzo v. City of New York (S.D.N.Y. 2022). “Under City policy, employees who hold non-managerial, non-uniformed civil servant titles, may receive lump-sum payments for the compensatory time they accrued in FLSA-covered positions, as provided in 29 C.F.R. § 553.27 (b). Jd. 447. But as to time accrued in other positions,…”
Perry v. Hardeman Cnty. Goverment (W.D. Tenn. 2024). “29 C.F.R. § 553.27 (b) (making it mandatory for an employee to receive payment for unused comp time “[u]pon termination of employment .”
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