Cheers! Happy Hanukkah! Merry Christmas! Whatever your employees celebrate outside of the office is their choice. The way you pay them for it is your choice. Check out these 8 best practice tips regarding Holiday pay, so you know what your options are.

Do you have to pay for holidays?

You are not required to pay non-exempt employees for holidays. Paid holidays are a discretionary benefit left entirely up to the employer. Exempt employees are a different case. The Fair Labor Standards Act (FLSA) does not permit employers to dock the salary of an exempt employee for holidays. You can make a holiday unpaid for exempt employees, but it will jeopardize their exempt status, at least for that week. 

What happens if holiday falls on an employee’s regularly scheduled day off, or when the business is closed?

While not required under law, many employers give an employee the option of taking off another day if a holiday falls on an employee’s regular day off. Similarly, many employers observe a holiday on the preceding Friday or the following Monday when a holiday falls on a Saturday or Sunday when the employer is not ordinarily open. 

If we choose to pay non-exempt employees for holidays, can we require that they serve some introductory period to be eligible for the paid holiday?

It is at the discretion of the employer as to whether they want to design a policy to qualify non-exempt employees immediately upon hire or after serving some introductory period. Similarly, an employer can choose only to provide holiday pay to full-time employees, but not part-time or temporary employees. 

Can we require employees to work on holidays?

Because holiday closings are a discretionary benefit, you can require employees to work on a holiday. In fact, the operational needs of some businesses will require that some employees work on holidays. 

Can we place conditions on the receipt of holiday pay?

Yes. Some employers are concerned that employees will combine a paid holiday with other paid time off (PTO) to create extended vacations. To guard against this situation, some companies require employees to work the day before and after a paid holiday to be eligible to receive holiday pay. Or some companies will require advance approval. 

How do paid holidays affect overtime rules for non-exempt employees? 

If an employer provides paid holidays, it does not have to count the paid hours (for a holiday) as hours worked for purposes of determining whether an employee is entitled to overtime. Also, an employer does not legally have to pay any overtime or other premium rates for working on holidays (although many employers choose to do so as an incentive for employees to work on a holiday). 

Do you have to provide holiday pay for employees on FMLA leave?

It depends. You have to treat FMLA leaves the same as other non-FMLA leaves. Therefore, you only have to pay an employee for holidays during an unpaid FMLA leave if you have a policy of providing holiday pay for employees on other types of unpaid leaves. Similarly, if an employee reduces his or her work schedule for intermittent FMLA leave, you may proportionately reduce any holiday pay (as long as you treat other non-FMLA leaves the same). 

If an employee takes a day off as a religious accommodation, does it have to be paid?

No, not necessarily. An employer must reasonably accommodate an employee if he/she has a sincerely held religious belief, practice or observance unless doing so would pose an undue hardship. One example of reasonable accommodation is unpaid time off for a religious holiday or observance. Another is allowing an employee to use a vacation day for the observance. 

It is always best practice to be upfront and honest with your employees. Holiday pay should most definitely be covered in your employee handbook so that everyone knows what to expect. Now go celebrate!