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It depends on how much time off you give them, and when. Private employers are not allowed to give straight compensatory or "comp" time -- one hour off for every hour worked -- because this type of arrangement cheats employees out of their higher overtime pay. However, there are a couple of ways to rearrange an employee's work schedule during a pay period to avoid paying overtime. For more information, see Nolo's article Compensatory Time Might Not Be Legal.