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10 Answers to Your Most Pressing Holiday Pay Questions Revealed



10 Answers to Your Most Pressing Holiday Pay Questions Revealed

Most employers offer paid holidays as a benefit to employees. Company holidays often raise questions about how pay, scheduling, and other issues are handled. The following are some common questions related to holiday pay and time off.

Q: Are paid holidays required? Are there a minimum number of holidays that my company is required to observe?

There is no federal requirement for private employers to provide paid holidays to employees. However, if an employer promises paid holidays, they must be provided. Because there is no requirement to provide paid holidays, employers are free to choose which holidays to observe. Some of the most commonly recognized company holidays include: New Years Day, Memorial Day, the Fourth of July, Labor Day, Thanksgiving, and Christmas.

Tip: Inform employees of each year’s holiday schedule as far in advance as possible. Consider posting the holiday schedule on bulletin boards and in other common areas.

Q: I don’t offer paid holidays. Can I deduct from an exempt employee’s salary when the company is closed for a holiday?

Employees who are exempt from the overtime requirements of the Fair Labor Standards Act must receive their full salary in any workweek in which work is performed. Deductions may not be made when an employee is ready, willing, and able to work, but there is no work available. Therefore, if you are closed for a holiday for less than a full workweek, an exempt employee must receive their full salary, as long as he or she worked any portion of the workweek.

Caution: Improper deductions violate the FLSA’s salary-basis test and may jeopardize an employee’s exempt status.

Q:  May I require nonexempt employees to work the day before and after a holiday to receive a paid holiday?

To limit absenteeism around holidays, some employers require nonexempt employees to work the day before and after a company holiday in order to receive pay for the holiday time off, unless the employee requests the additional time off in advance. There is no federal law that prohibits this practice when it is applied for nonexempt employees.

Q: Can I require employees to work on a holiday?

Due to the nature of many businesses, it may be necessary for employees to work on a holiday. In general, you may require employees to work on a holiday, but employers should be mindful that reasonable accommodations for employees’ religious beliefs and practices may be required. Under Title VII of the Civil Rights Act, employers with 15 or more employees are required to provide reasonable accommodations for employees’ sincerely held religious beliefs and practices, unless it would impose an undue hardship. The Equal Employment Opportunity Commission’sCompliance Manual has a number of best practices for providing religious accommodations, such as encouraging and facilitating voluntary shift swaps and permitting flexible scheduling.

Q: If employees work on a company holiday, do I have to pay them a premium, such as double pay?

No federal law mandates that an employer pay an employee a premium in addition to their regular rate of pay for work performed on holidays (other than the overtime premium required for work in excess of 40 hours in a workweek). Some employers, however, do offer premium pay for working on a holiday, typically either 1.5 times or 2 times an employee’s typical pay rate.

Q: How does offering a paid holiday affect overtime?

Under the Fair Labor Standards Act, nonexempt employees are entitled to overtime for “hours worked” in excess of 40 in a workweek. Paid time off, including holidays, is not considered “hours worked” under federal law. For overtime calculations, holiday pay may be excluded when determining an employee’s regular rate of pay although some employers voluntarily count paid holiday time off as hours worked.

For example:An employee works 30 hours during the week of Thanksgiving and receives Thanksgiving and the Friday after Thanksgiving off as paid holidays. The employee would not be entitled to overtime pay for that workweek under federal law because his or her actual hours worked is 30.

Q: How does offering premium pay for working a holiday affect overtime calculations?

For overtime calculations, premium pay for working a holiday may be excluded when determining an employee’s regular rate of pay. In addition, premium pay for working a holiday can be credited toward overtime pay due as long as the premium pay is at least 1.5 times the employee’s normal pay rate (See 29 USC Section 207 (H) (2)).

Q: What options do I have if a holiday falls on an employee’s day off?

If a holiday falls on an employee’s day off, some employers, though not required to do so, allow employees to take another day off around the holiday.  For example, let’s say an employee regularly has Wednesdays and Thursdays off and your company offers Thanksgiving as a paid holiday. You may choose to provide the employee with another paid day off (e.g., the day after Thanksgiving) since the employee’s schedule would have had him off for Thanksgiving anyway.

Q: When should we observe a holiday that falls on a day in which the company is normally closed?

For holidays that fall on a day in which the company is normally closed, many employers choose to observe the holiday either the day before or the day after. Holidays that fall on a Saturday are typically observed the day before (i.e., Friday) and holidays that fall on a Sunday are typically observed the day after (i.e., Monday).  For example, Christmas falls on a Sunday this year. If your business is typically closed on Sundays, you may want to consider observing Christmas on Monday, December 26.

Q: We are covered by the Family and Medical Leave Act (FMLA). If a holiday falls on a day that an employee is on FMLA leave, can that day be counted against his or her FMLA leave entitlement?

If an employee is using FMLA leave in increments of one week, the week is counted as a week of FMLA leave even if a holiday occurs during the week.  However, if an employee is using FMLA leave in increments of less than a week, the employer is prohibited from counting a holiday against the employee’s leave entitlement, unless the employee was otherwise scheduled and expected to work during the holiday.

Note:The FMLA applies to employers with 50 or more employees; however, your state may have similar leave laws that apply to employers with fewer than 50 employees. Check your state and local laws to ensure compliance.

Employers should have a written holiday policy that addresses pay, scheduling, and other related issues. As with any policy, it’s important to ensure supervisors are properly trained on your holiday policy and that it is consistently enforced.

Do you have questions about holiday pay? If you would like assistance with this or other HR questions, please click here to contact a friendly Payroll Medic today!


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