By Joanna Vilos
With a holiday weekend upon us, it’s a good time to address holiday pay concerns. Many employers struggle with how to pay employees for holidays, especially when the holiday overlaps overtime hours, FMLA leave, or another provided benefit. Here are some tips to help guide you through the pay issues so that you may enjoy the holiday.
1. Holiday Pay Is Not Required
Employers are not required to provide holiday pay under federal law. That means you don’t have to pay non-exempt employees holiday pay for taking the day off. Of course, if non-exempt employees perform work on a holiday, you need to pay them their normal wages for all hours worked. But no premium pay is required. For exempt employees, in order to meet the salary requirement to maintain exempt status, you cannot dock their salary if they do not work on the holiday.
Even though it is not required by law, many employers choose to offer holiday pay as a company-provided benefit. If your company offers holiday pay, read further for additional tips.
2. Holiday Policy May Provide Conditions
You may establish conditions that must be met in order for an employee to receive holiday pay. For example, you may require that an employee work the day before and after a paid holiday in order to receive holiday pay. If you include such conditions in your holiday policy, be sure to communicate your policy to your employees and then enforce the policy uniformly and consistently.
3. Paid Holiday Hours Need Not Be Counted When Determining Overtime
If you provide holiday pay to employees who do not work on the holiday, you do not have to count the paid holiday hours as hours worked for purposes of determining whether an employee is entitled to overtime that week.
4. Holidays During FMLA Leave
If a holiday falls when an employee is out on FMLA leave, holiday pay will be due if you have a policy of providing holiday pay to employees out on other types of unpaid leave. However, if your policy is not to pay holiday pay to employees out on other types of leave, then you do not have to provide holiday pay to the employee on FMLA leave. In other words, you must treat the employee on FMLA leave the same as you would treat employees on other non-FMLA leaves as found in your company policies.
5. Holiday on Regular Day Off or During Vacation
What do you do if a holiday falls on an employee’s regular day off or during a scheduled vacation? Because holiday pay is a company-provided benefit, you can choose what to do in such situations. Perhaps you choose to allow such employees to observe the holiday on the preceding work day. Or instead you choose to allow the employee to pick any other regular workday off. Perhaps you decide to pay the holiday pay but not allow another day off. Whatever you choose to do, establish a uniform policy that will work for your operation, let employees know what your policy is and ensure that you treat all similarly-situated employees similarly.Hopefully these tips help take the stress out of your holiday. Always review the law in your state to make sure your policies comply with state-specific requirements.