June 26 Tip of the Week

“Holiday Pay”

With the relatively recent adoption of a new federal holiday, Juneteenth, it is a good time to revisit an employer’s obligations regarding holiday pay or, more accurately, pay for time not worked.  In general, the federal wage and hour laws do not require an employer to pay non-exempt or hourly employees for time not worked.  In fact, the United States Department of Labor defines holiday pay as a benefit and states that the availability of such pay is a matter of agreement between the employer and the employee.  The majority of states follow this same rule, with two noted exceptions.  Both Massachusetts and Rhode Island have special holiday pay provisions that apply in certain circumstances.

Massachusetts has certain “Blue Laws” that have been in effect for years.  These laws, which apply to private employers require permits for certain employers to work on Sundays and certain holidays.  Non-retail and manufacturing businesses need permits to operate on Sunday and holidays from the local law enforcement agency unless they are subject an exemption.  Retail businesses do not require a permit to be open on Sunday. Retail businesses in Massachusetts  are subject to limitations on the hours that they can be open on certain holidays.  Until January 1, 2023, retail establishments were required to pay their employees premium pay for time worked on Sunday and holidays, but this provision of the law has been eliminated.  Retail establishments, however, cannot force or require their employees to work on Sunday and holidays.  This limitation on scheduling essentially requires employers to entice employees to work these days through premium pay. 

Rhode Island is the only other state that required employers to pay premium pay to their employees for work performed on Sundays and certain state-recognized holidays.  This requirement remains in effect in Rhode Island. 

Remember, also, that salaried employees by default are required to be paid for holidays if the holiday falls within the workweek and the business is closed.  Under the salary basis rule, an employer cannot take a deduction from the exempt employee’s salary for business closures of less than one week.  An employer can, however, require an exempt employee to use a vacation or PTO day to cover the holiday closure.  The problem with this is that, if the employee does not have any PTO or vacation time available to them, an employer cannot take the deduction for the loss of the one day’s work. 

What is the significance of these arcane rules for employers in general?  Once again, it is a reminder that compliance is a tricky situation.  There are a number of state, federal and local laws in place that affect the employment relationship and an employer is responsible for ensuring that they are aware of these laws and of any changes to these laws.  In situations involving holiday pay and other benefits that, in most cases, an employer can offer to its employees of its own accord, those policies need to be written down and distributed to employees so that everyone is clear about what is available and in place for all employees.  myHRcounsel can assist you in being proactive in your employee relations by keeping you informed of the laws that apply to your business operations and by providing you with a legally compliant employee handbook that covers all aspects of the employment relationship. 

For more information about the various options for time-off, join us for our webinar on July 26th! Register here…