Some employers will give employees paid time off instead of paying them overtime wages. Except in certain circumstances, this is illegal under the federal Fair Labor Standards Act. Using comp time instead of overtime pay is limited by the FLSA
to public agencies that are a state, political subdivision of a state, or an interstate governmental agency.
In most other situations, "comp time" (time off instead of overtime pay) is illegal under the FLSA. Non-exempt employees under federal labor laws who work over 40 hours in a work week must be paid for every hour you work, plus time-and-a-half for your overtime rate.
Read our article for more information: Comp Time off instead of Overtime Pay Under the FLSA