As a public employer how do we setup a Time off policy for compensatory time in lieu of overtime which varies each pay period?

Welcome to the Community, Jan. Setting up a Time Off policy is available to the employee profile in the Payroll section. Let me share more details about this.

Concerning the time calculations, rate, and kind of policies you'll make, I recommend contacting an accountant or payroll specialist to ensure that the policy you create is aligned with your organization's standards. Here's how:

1. Select the Payroll tab from the left panel navigation of your QuickBooks account.
2. Pick Employees.
3. Find and click the employee profile you want to set up a Time off policy.
4. Scroll down from the Profile section and click the Start/Edit tab from the Time off field.
   
5. Choose either Vacation pay, Paid time off, Sick pay, or Unpaid time off.
6. If you pick e.g. Vacation pay, click the Add new vacation pay policy from the dropdown button.
   
7. Enter information in the Description, Hours are accrued, Hours per year, and Maximum allowed fields. After that, Save.
8. Once done, click the Save icon on the lower corner to apply the changes.

You can also visit this article for more information: Set up and track time off in payroll.

Additionally, feel free to access this article if you wish to have a quick view of your payroll totals, including employee taxes and contributions: Create a payroll summary report in QuickBooks.

Never hesitate to return here if you have additional questions about setting up a Time off policy or any payroll item. We'll be willing to assist you always. Have a good one.

The response does not solve the problem for Compensatory Time (Comp Time). The paid time off policies in QBO (vac, sick or PTO) are all based on accrual. Comp time does not accrue each pay period and a new policy will not accept a zero value. We need to have a balance at the BOY, add to the balance (not accrue) in a pay period when comp time is earned (in lieu of paid overtime), and enter paid Comp Time hours used that is subtracted from the balance. The comp hours earned could be manually added to the balance prior to hours entry in a current pay period, but the programming requiring accrual prevents this from working. One QBO consultant suggesting setting the policy for "unlimited" but this suppresses the printing of a correct balance in the "Time off" report. (We did make this work in QBDT, customizing sick leave).  Again, this is a common need for governmental employers.