Holiday Pay

This is the time of year when many employers close their facilities in observance of year-end holidays. These holiday closures can create confusion about how to compensate employees.  Although private employers generally aren’t required to pay employees when they perform no work, most organizations recognize that in order to be competitive, they need to compensate employees for days the facility is closed in observance of a holiday.

Employers Association Forum’s (EAF) recent Holiday Survey shows that most employers will be closing all or part of December 24 as well as Christmas Day.  Additionally, many employers will be closed the following week on New Year’s Day.

While non-exempt employees must be paid for all hours worked during the week, employers are not required to pay them for the time off to observe a holiday…even though most companies provide paid holidays as a benefit.  Time off for the holiday does not have to be included in the calculation of hours worked for purposes of overtime.

A number of employers have implemented policies requiring an employee to complete his or her orientation period before they can receive pay for a holiday. While that policy is fine for non-exempt employees, exempt employees fall under a different set of rules under the Fair Labor Standards Act.

The Fair Labor Standards Act (FLSA) does not permit you to dock the pay of a salaried exempt employee because the company is closed for a holiday.  The Department of Labor Fact Sheet specifically states: “If the employer makes deductions from an employee’s predetermined salary, i.e., because of the operating requirements of the business, that employee is not paid on a “salary basis.” If the employee is ready, willing and able to work, deductions may not be made for time when work is not available.” 

With the current rash of FLSA lawsuits, it’s more important than ever to make sure the organization is compliant with their wage payment practices. The Department of Labor (DOL) provides numerous fact sheets on a variety of FLSA topics in order to assist employers in complying with the law.

Our People Experts at EAF are knowledgeable about Holiday Pay and can answer your organization’s pressing questions on this topic.  To learn more about EAF’s hotline, please call or email us at 407.260.6556 or [email protected].