Are you Required to Pay on Holidays?

With the upcoming holidays approaching, many employers have questions regarding holiday pay.  Are private employers required to give employees time off?  Does the law require private employers to pay a premium rate, such as time and a half, to employees who work on holidays?  State and federal laws differ with regard to holiday pay.

There is no requirement under federal law for private employers to provide paid time off or a premium wage on holidays, with the exception of employers who work on federal contracts.  (In the case of federal contractors, holiday pay requirements are established in the individual contracts, subject to the McNamara O’Hara Service Contract Act and the Davis-Bacon Act.)

Forty-eight states and the District of Columbia have no laws requiring paid holidays or premium holiday rates.  Massachusetts and Rhode Island are the exceptions, with laws requiring private employers to pay a premium rate to certain employees who work on designated holidays.  Even in states that do not mandate holiday pay, employers may be legally required to comply with their own established holiday pay policies and may be sanctioned or fined for failing to follow their own policies.

In the case of employees subject to an employment contract or collective bargaining agreement, the contract or agreement will govern whether an employee is entitled to paid holidays or premium holiday pay.

Paid and unpaid holiday time off can impact private employers from a wage and hour perspective.  If an employer chooses to provide paid time off on holidays, those paid holidays do not count as “hours worked” for the purpose of calculating overtime.  However, an employee is still entitled to the overtime rate of pay if working on a holiday requires the employee to work more than 40 hours per week.  Even if an employer does not provide paid holidays, an exempt employee must be paid his or her entire salary if he or she performs any work during the week in which the holiday falls.  Docking an exempt employee’s pay because an employer considers holidays to be unpaid could result in the loss of that employee’s exempt status.

Consult myHRcounsel’s expert employment attorneys to ensure that your holiday pay policies are in compliance with state and federal law.