How to Manage Holiday Pay at Your Company
How to Manage Holiday Pay at Your Company

How to Manage Holiday Pay at Your Company

When a company decides to close on July 4th, Memorial Day, Thanksgiving Day, or for the entire week between Christmas and New Year's Day, is the employer required to compensate any of its employees? Well, that depends.

What You Need to Know about Holiday Pay Policies

Per the Department of Labor, the Fair Labor Standards Act does not require payment for vacation or holidays. Employers are responsible for establishing which days are recognized as holidays and communicating them to employees through a company handbook.

    Non-Exempt Employees

    For non-exempt (overtime-eligible employees), the company is generally not required to pay employees on days in which they do not perform work. As long as all non-exempt employees are notified of the closure prior to reporting to work on the holiday, no pay is required. If the non-exempt employee has accrued vacation or PTO time, the employee may request or the employer may require that the employee use accrued vacation or PTO to cover the days of the holiday closure. medical staff meeting

    Exempt Employees

    For exempt employees who are paid on a salaried or fee basis, federal law requires the company to pay the employee his or her regular salary without interruption for business closures that extend less than one full work week. Failure to provide this continued compensation is likely to jeopardize the employee's exempt status. A "work week" is the predefined seven-day period that the employer uses for payroll purposes. Unless the closure extends for a full work week, the exempt employee should experience no interruption in salary for the purpose of a holiday closure. The employer may require the exempt employee to use accrued vacation time or PTO time to cover the closure. However, if the exempt employee does not have sufficient accrued time to cover the holiday closure, the employer is required to ensure the exempt employee experiences no interruption in salary.

    Added Benefit: Premium Pay for Holidays

    As a benefit to workers, many companies opt to pay non-exempt employees a premium for working holidays. A 2017 SHRM Holiday Schedules survey found that 57% of organizations surveyed pay a premium to employees who work on a holiday when the business would normally be closed. And of these organizations, 40% pay double-time, 21% pay time-and-a-half and another 19% said they paid overtime. medical staff meeting

    Holiday Work Schedules

    Holiday schedules vary significantly by industry and even job type. No two organizations are the same, and some may choose to offer more paid holidays than others. Here's a look at the most common: The same SHRM survey we detailed above found that over 90% of organizations close for New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. No matter which days your organization officially recognizes, it's critical that you set proper expectations with your workforce. Not only should your company handbook contain a clear and consistent policy and guidelines regarding holiday pay, but be sure to include which days you recognize as paid holidays. It is also important to note that the law only requires employers to consider actual hours worked as opposed to hours paid when calculating overtime pay. If an employer provides paid holidays, it is not required to count the unworked paid holiday hours towards the overtime calculation for a non-exempt employee.

If you're looking for more information on creating holiday policies, Paycor's Benefit Administration Software offers several resources to help you communicate properly with employees and prevent compliance mistakes. Click here to speak to a Paycor Solutions Consultant about the ways we can help you mitigate compliance risk.

This content is intended for educational purposes only and should not be considered legal advice. If you have specific questions regarding holiday closures at your organization, we recommend you consult with an attorney.


time and attendance software

More to Discover

DOL Final Overtime Rules: Quickstart Guide for Employers

DOL Final Overtime Rules: Quickstart Guide for Employers

On September 24, 2019, the Department of Labor issued its final overtime rule to increase the minimum salary threshold for executive, administrative and professional exemptions from $455 per week ($23,660 annually) to $684 per week ($35,568 annually). The new rule goes into effect January 1, 2020.As your organization considers how to prepare and comply, we’ve created this guide which outlines the new ruling, provides tips to manage impacted employees and offers a checklist of key details to follow to mitigate risk. Click below to instantly download the guide.

What are W-3 Forms? FAQs and Helpful Tips for 2020

What are W-3 Forms? FAQs and Helpful Tips for 2020

As a trusted HR & payroll provider, Paycor gets hundreds of questions about Form W-3 each year. To help HR professionals mitigate risk, our compliance experts answered the most frequently asked questions around Form W-3. What is a W-3 form? Technical answer: Form W-3 is used to total up all parts of Form W-2. Both forms are filed together and sent to Social Security Administration (SSA) every year. Form W-3 is also known as “Transmittal of Wage and Tax Statements.”What employers really need to know: As an employer your responsibility is to review all W-2s for your workforce, summarize employee wages and tax information and then combine that data into one W-3 form. What’s the difference between Form W-2 and Form W-3? The difference...

Employer Breastfeeding Laws by State

Employer Breastfeeding Laws by State

Breastfeeding, ACA and FLSA When President Obama made the Affordable Care Act (ACA) the law of the land in 2010, new amendments to the Fair Labor Standards Act (FLSA) addressing breastfeeding in the workplace went into effect. The new guidelines require all employers in every state to provide reasonable break time for an employee to express breast milk for their nursing child for one year after the child’s birth. States are Making Changes While the federal government laid the foundation, 32 states have built upon the basic law. Some states have clarified whether these breaks are paid or unpaid and some have extended how long breastfeeding mothers are protected by the law.Where does your state stand? Use the chart below to find out....

Case Study: Smuttynose Brewing Company

Case Study: Smuttynose Brewing Company

Compliance concerns and a desire to streamline their overall HR process led Smuttynose Brewing Company in Hampton, N.H., to find HR & payroll software that suited their needs. With employees scattered throughout the Northeast, Smuttynose needed an efficient way to collect hours worked and to ensure payroll tax compliance. “Paycor is a one stop shop with great customer service and that service does not stop after implementation. I consider Paycor to be a true partner. I am extremely satisfied that I made the switch to Paycor and believe that satisfaction will only grow stronger as our partnership has a chance to mature.” —Mia Jennings, Director of HR, Smuttynose Brewing Paycor’s HR, recruiting and onboarding solutions streamlined a...