(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 Sec. 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]
