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​The Basics of Holiday Pay: 5 Solutions to Tricky Scenarios
Published on 8/24/2015 12:00:00 AM
employee holiday pay 

The beginning of each season brings a flurry of changes to production schedules, employee time off requests and questions about holiday pay. Who gets paid for what time off? Should employees be able to make up missed time? What should you do about unplanned absences? Let me walk you through the basics of holiday pay and what it takes to navigate some of the more common workplace scenarios.

First of all, the 12 paid holidays under the federal government are:

  • ​New Year's Day (January 1)
  • Birthday of Martin Luther King, Jr. (third Monday in January)
  • Washington's Birthday (third Monday in February)
  • Memorial Day (last Monday in May)
  • Independence Day (July 4)
  • Labor Day (first Monday in September)
  • Columbus Day (second Monday in October)
  • Veterans Day (November 11)
  • Thanksgiving Day (fourth Thursday in November)
  • Christmas Day (December 25)

All of these are paid federal holidays; as such, businesses in the private sector are not required to close on these dates. Furthermore, private businesses that choose to close on these days don’t necessarily have to do so with pay, nor do they have to pay time-and-a-half if employees work these days, according to federal law. (Your state laws may vary on both counts.)

Your full-time exempt employees, even those taking advantage of any flexwork opportunities, should receive their normal weekly salaries. Part-time exempt employees may get pro-rated salaries if the holiday falls on a normal working day. Non-exempt workers, or hourly workers, who don’t work on these days should not be paid for these missing hours.

Since there aren’t any federal laws about holidays and pay, and different employees get different pay on these days, there’s usually some confusion. Send out an e-mail in advance to all employees to remind them how your business handles the holidays (who takes off which days, if different departments recognize different holidays) and whether or not work on these days is paid as overtime. Include a statement that employees should come to you if they have any questions – yes, they will have questions!

Here are a few scenarios you may encounter:


A part-time or hourly employee expects to receive overtime pay for working this day.
First, check your state laws on this matter. Most states do not have any laws about holiday pay, but it’s always important to double-check. Next, you’ll want to verify how many hours your employee already worked during that workweek. If the employee hasn’t worked more than 40 hours, he or she is not entitled to overtime pay under federal law. Once you’re sure about your state laws and your employee’s hours, plan to meet with the employee one-on-one to explain this information and apologize for any misunderstandings.
Part-time or hourly employees would like to work on the holiday or another non-working day so their pay won’t be docked.
Again, a one-on-one meeting is best here. Explain to your employee that your business is closed and no one is working, so he or she can’t come in. For part-time employees that work a set schedule, remind them that it’s a fixed schedule and your business can’t accommodate their shift changes.


If your business can accommodate a shift change, it’s your choice whether or not you allow employees to work. With hourly workers, check any laws or temp agency regulations regarding employees working longer than eight hours in a day without receiving overtime. If that’s the case and your business can accommodate the employee to make up some of the hours over the rest of the week, again, it’s up to you whether you allow it. If you have lots of part-time or hourly workers, however, be forewarned that you have to permit everyone to do this -- or set neutral, business-related criteria for extending this benefit to certain employees, which may cause some headaches down the line. It is also important to make sure you always have a supervisor or manager on site with them at all times during every shift.

Exempt employees who work compressed work weeks want an “extra” day off.
Let’s say a holiday falls on a Monday and employees who work compressed work weeks already have Mondays off. This means they’ll work a 40-hour week while other coworkers will probably only work a 32-hour week. It’s up to you whether or not you allow them to choose another day off for that week; again, no federal laws apply here. You can point out that flexwork itself is a benefit that your employee voluntarily takes advantage of, if an employee is upset about your decision. Handle part-time workers similarly if they work a set schedule that always includes Mondays off.
An employee who honors a specific religious holiday expects the day off but has no paid time off.
According to federal law, you are obligated to provide reasonable accommodations for religious practices, unless it would cause undue hardship for your business. If your business can afford to give the employee a day off, then you have to allow it for religious purposes. In the past, courts have determined that unpaid time off is a "reasonable accommodation," so if an employee has burned through his or her paid time, consider treating it like a vacation or personal day. Many companies offer "floating holidays" allowing employees to designate certain days throughout the year as extra vacation days to accommodate these kinds of requests.
An exempt employee fails to show up for work on the holiday or the day after.
This is where that e-mail you sent to everyone may come in handy, since your employee presumably read the e-mail and knew the expectations. Handle this as you would any other unannounced absence. Check in with the employee’s supervisors to rule out a scheduling change or out-of-office meeting you weren’t aware of. Document the absence and arrange for coworkers to handle any pressing tasks. Finally, once your employee shows up, talk to him or her to determine whether the day should be docked as a sick day, vacation day or unpaid day. Although federal law restricts you from docking an exempt employee’s pay, you have flexibility to deduct hours from the employee’s time-off bank.
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