Holiday Pay, Fair Labor Standards Act (FLSA) & New Employees
With the advent of the holidays, it’s a good time to review your company’s holiday pay policies and practices. Below are a few questions to ask yourself in evaluating these.
Must an employer provide employees time off on holidays?
No. There is no Federal law that requires an employer to provide time off – paid or otherwise – to employees on nationally-recognized holidays. According to MEA’s 2013-2014 Holiday Survey, most companies do offer time off to employees for the following nationally-recognized holidays:
- Memorial Day
- Independence Day
- Labor Day
- Thanksgiving Day
- Christmas Day
- New Year’s Day
Must holiday time off be paid?
No, an employer does not have to pay non-exempt (hourly) employees for time off on a holiday. An employer is only required to pay non-exempt employees for time actually worked.
Exempt employees (that is, salaried employees who are “exempt” from wage and overtime requirements and do not receive overtime) who are given the day off must be paid their full weekly salary if they work any hours during the week in which the holiday falls.
Must paid time off be counted as hours worked in determining whether a non-exempt employee is entitled to overtime pay?
No. If an employer provides paid holidays, it does not have to count the paid hours as hours worked for purposes of determining whether a non-exempt employee is entitled to overtime compensation. Federal law requires that employees who are non-exempt receive overtime pay for any time worked beyond forty hours in any one workweek, however, this refers to hours actually worked. Paid time off (holidays, vacation, sick leave, etc.) is not considered time worked.
Note: state overtime laws may differ from Federal requirements, and there may be additional provisions for determining overtime included in collective bargaining agreements.
What if a holiday falls on an employee’s day off or when the business is closed?
While not required by law, many employers give an employee the option of taking off another day if a holiday falls on the employee’s day off. Similarly, some employers observe a holiday on the preceding Friday or the following Monday if a holiday falls on a Saturday or Sunday and the employer is not open for business on the weekend.
May an employer attach conditions to the receipt of holiday pay?
Yes. For example, an employer may require that employees work or be on an approved leave status the day before and after a holiday in order to receive holiday pay. An employer may also require an employee to have worked for the company for a specified period of time before being eligible for holiday pay. In addition, an employer may pro-rate the amount of holiday pay due to a part-time employee. Whatever conditions apply to the receipt of holiday pay should be in writing in the employer’s policy.
Can we exclude new employees who have not completed their 90-day introductory period from our paid holiday policy?
You can exclude new non-exempt employees from holiday pay as long as this is consistent with your organization’s policy. If there is no collective bargaining agreement or other contract specifying that new employees are eligible for holiday pay, then it is up to your organization’s policy.
Such an introductory period as related to a paid holidays policy should be applied only to nonexempt employees. If you do not pay exempt employees for holidays they do not work, you may jeopardize their exemption status under the FLSA. Under the FLSA, exempt employees must be paid a regular salary, regardless of the number of hours they work or the quantity or quality of their work, and they are not entitled to overtime.
Though FLSA regulations recognize a limited number of instances when an employer may make deductions (or “dock”) for absences of a full day or more without jeopardizing exemption status, holidays do not fall under any of these exceptions.
Following your policies and practices on a consistent basis is very important. Here’s to the happy administration of holiday pay!
*This MEA Member Alert is provided for general informational purposes only and does not constitute legal advice.
[author] [author_image timthumb=’on’]https://meainfo.org/app/uploads/2014/10/leslie-barringer.jpg[/author_image] [author_info]Leslie Barringer
Director of Compensation & Benefitslbarringer@meainfo.org[/author_info] [/author]