We have an employee who wants to save hours when he works overtime. For example: Works 45 hours in one week, he wants to be paid for 40 and save the other five for when he has a short week. Is this legal and are there any problems with this? Illinois.

No, it is not legal, and you would be violating both state and Federal laws by allowing him to do this. He MUST be paid for all the hours he works in any given week, in the paycheck corresponding to that week, and he MUST be paid overtime for any hours over 40 in a week that he works. Even if this is his idea, you still cannot do it legally.

I figured that but told him I would ask, also though, what about companies that give their employees "comp" time instead of overtime? is that allowed?

what about companies that give their employees "comp" time instead of overtime? is that allowed? Not in the private sector. If a non-exempt employee works more than 40 hours in a 7-day payroll period, he or she MUST Be paid time and a-half. You may not offer comp time in lieu of overtime pay, even if you have employees who are requesting that.

Just to clarify though - if (for example) you have an employee who has put in 40 hours by noon on Friday and wishes to take that afternoon off rather than work any OT and you're okay with that, that is perfectly legal. A lot of people call that "comp time." It's not. It's simply a schedule change for that week.

Also, comp time is legal if (a) the employer is a state, Federal or local govt. agency OR (b) the employee is exempt.

Plus cicy43, do you really want the adminstrative costs and headaches that would go with his request? Sometimes being nice is simply to expensive and a liabililty that an employer should avoid. Bottom line, if there ever is a dispute of unpaid overtime, the employee usually wins, back pay and double damages.

Bottom line, it's his job to manage his budget, not his employer.