With the holiday season upon us, you, as an employer, may have questions about providing time off for certain holidays, how to handle pay for company recognized holidays, and how best to manage time off requests and scheduling issues. To help clarify these issues, we’ve addressed several myths concerning company holidays.
Myth: Employers are required to observe certain holidays.
Fact: You may be surprised to learn that, under federal law, employers in the private sector can choose whether or not to observe holidays such as New Year’s Day, Memorial Day, the Fourth of July, Labor Day, Thanksgiving, and Christmas. Note that some states require certain types of businesses to be closed on legal holidays and certain employees to be able to take off on certain holidays (e.g., veterans on Veteran’s Day). Check your state law to ensure compliance.
Myth: Employers cannot require employees to work on a holiday.
Fact: Under federal law, an employer generally may require employees to work on a holiday. Employers should remember, however, that they may need to consider providing reasonable accommodations for employees’ religious beliefs and practices. Under Title VII of the Civil Rights Act, employers with 15 or more employees are generally required to provide reasonable accommodations for employees’ sincerely held religious beliefs and practices, unless doing so would impose an undue hardship. This may include providing unpaid time off. The Equal Employment Opportunity Commission’s Compliance Manual has a number of best practices for providing religious accommodations, such as encouraging and facilitating voluntary shift swaps and permitting flexible scheduling.
Myth: Employers must pay non-exempt employees for time off on company holidays.
Fact: Employers generally are not required to pay non-exempt employees when they do not work on a holiday, unless the employer has a policy or practice stating otherwise. However, most employers do offer paid holidays to full-time, non-exempt employees.
Myth: Employers can make deductions from exempt employees’ salaries when the company is closed on a holiday.
Fact: But for a few very limited exceptions, exempt employees must receive their full salary for any workweek in which they perform any work. This means that if the company is closed on a holiday and the employee works any part of the workweek, he or she must still receive their full salary, regardless of whether the employer offers paid holidays.
Myth: Non-exempt employees who work from home on a company recognized holiday without prior authorization are not entitled to pay.
Fact: Employers must pay employees for all hours worked, regardless of whether the time was authorized in advance. The employer, however, may consistently apply their disciplinary action policy to employees who work without prior authorization, but in no case may the employer withhold pay.
Myth: All non-exempt employees must receive “premium pay” when they work on a holiday.
Fact: Under federal law, private sector employers are not generally required to provide premium pay for work performed on holidays (other than the overtime premium required for work in excess of 40 hours in a workweek). While the majority of states do not require premium pay for work on a holiday either, there are exceptions for certain employers in states such as Massachusetts and Rhode Island. Be sure to check your state law to ensure compliance. Even if not required, some employers voluntarily provide premium pay for working on a holiday as an incentive to employees, typically either 1.5 times or 2 times an employee’s normal pay rate.
Myth: Paid holidays must be included when determining whether overtime is due.
Fact: Under the Fair Labor Standards Act (FLSA), non-exempt employees are entitled to overtime for “hours worked” in excess of 40 in a workweek. Paid time off, including time off for holidays, is not considered “hours worked” under the FLSA. For example, consider the situation where an employee works 30 hours during the workweek of Christmas, receives December 24 and December 25 off as paid holidays, and is paid for 46 hours. Under federal law, the employee would not be entitled to overtime pay because his or her actual hours worked is 30. Some employers, however, choose to voluntarily count paid holiday time off as hours worked.
Myth: If a company holiday falls on an employee’s regular day off, an employer must offer the employee another day off.
Fact: If a holiday falls on an employee’s day off, employers are not required to offer another day off, but some employers do so voluntarily. For instance, consider when an employee regularly has Wednesday off and your company offers Christmas (which falls on a Wednesday this year) as a paid holiday. You may choose to provide the employee with another paid day off (e.g., the day after Christmas) since the employee’s schedule would have had him or her off for Christmas anyway.
Myth: Employers cannot require non-exempt employees to work the day before and after a company holiday to be paid for the holiday.
Fact: Under federal law, employers are generally permitted to require non-exempt employees to work the day before and after a company holiday in order to receive pay for the holiday time off. Typically, employers do not apply this policy to employees who scheduled the time off in advance. Note: This practice may not be applied to exempt employees.