If the picnic is during regular work hours, and the employer permits an employee to avoid that work period, then the employee can decide to not work (attend the picnic), and those hours would not apply to the employee's workweek, becacuse the employee is voluntarily agreeing to take four hours off, rather than work.
If the employee attends the picnic and is compensated, then the employer is paying for the employee's attendance during work time, and those are compensible hours.
The employer could argue that the payment is a "gift," rather than wages, but unless the employee can continue working during that four hours, rather than attend the picnic, then the wages are not really a gift at all, because the alternative is to attend the picnic or not work and not get paid, which means that the picnic is actually mandatory, since the alternative is to not receive pay (or substitute vacation pay for the pay not received).
Put another way, the offer of pay is not a gift at all -- it's coercive, i.e., "If you show up, you will get paid -- otherwise not." Therefore, the pay is wages.
Concerning "comp time," under California law, the agreement for comp time, must be in writing between the employer and employee, before the employee performs the work to be paid as comp time, the employee must be regularly scheduled for at least 40 hours per week, and the employee must request comp time as a substitute for overtime in writing. Labor Code 204.3.
Nothing in your fact pattern suggests that this is comp time, or a gift, and that leaves only one other possibility: wages. Therefore, if you attend the picnic and you are paid during that time, then you have worked 40 hours and all of your hours worked after that during the work week are overtime hours.
Hope this helps.
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