It is illegal for non-exempt employees of
private companies, as far as I know.
My company required both managers and hourly personnel to be trained in the rules for paying OT. It was done to make sure neither employees or managers ask for comp time, as it results in falsified records for one thing.
Basically, along with what I've learned from the Dept of Labor, it goes like this (union contracts may add their own rules, but may not reduce these), and an employee CANNOT bargain or AGREE to give up being paid OT:
1. Any hours over 40 in a workweek must be paid at 1-1/2 X hourly wage, period.
2. Some states have additional rules, like any time over 8 hrs/day must be paid at 1-1/2X.
3. Employers must have an established, official workweek for labor laws and cannot "change" it or "slide" it to avoid paying OT. For example, a company can identify their workweek as Monday 8:01 AM thru Monday 8:00 AM.
4. Employers cannot use an 80-hr pay period rule like some do. That means to try to make up for the hrs in excess of 40 for the first week by reducing your hours on week two. This is illegal, since it violates rules 1 and 3. It essentially becomes "forced" comp time.
5. Employers have the right tell an employee to not report for work once they have reached their 40 hours worked for the week.
6. Comp time is not an option. If more than 40 hours are worked, then OT must be paid (non-expemt or hourly employee).
My company, for example, had a Monday 8:01 AM to Monday 8:00 AM workweek. We typically work M-F. However, at the time of the training on wages and OT pay, the company changed their workweek to Sat 12:01 AM to Sat 12:00 AM. What this allowed them to do is avoid paying OT and save money. The OLD way, an employee who was called out and worked on Sat or Sun (the END of the pay week) was due OT pay. The new way, an employee who was called out and worked on Sat or Sun (the START of the pay week) was sent home once their 40 hrs were reached later in the week.
Here is a link I found on the web after a quick search. Not sure if it has any specific state regs in it...
http://www.hrhero.com/hl/101907-lead-comp.html