What You Need to Know About Holidays & Employee Compensation

Holiday payWith the holidays upon us, we often get questions from our clients about when, or if, they have to pay employees for working on holidays. 

When to pay employees for holidays, sick days or vacation days can sometimes be a confusing issue for small businesses with part-time or seasonal workers.  We’ve got the info you need!

What the law has to say about compensation & time off:

Neither federal law nor state law require you to pay anyone for vacation time, sick days or holidays.  All of these are benefits that businesses choose to provide, based on their ability to compensate their employees and remain profitable.

However, a few cities across the county have jumped into this discussion and are now mandating that employees be compensated for sick days.

In September, Seattle’s City Council voted to mandate that all but the smallest or newest employers provide paid sick days to their employees.   This ordinance goes into effect in September 2012 and is quite specific, complex and broad.  If your company performs business within the city of Seattle, it may apply to you.

The skinny on providing holiday pay:

Some small businesses must remain open on holidays, and wonder if they are required to pay employees time and a half for the holiday.

  • State law does not require that you pay extra for employees working on a holiday
  • If employees work 40 hours during a week that also contains a paid holiday (thus technically earning 48 hours of total pay instead of their normal 40) you are not required to give them overtime pay
  • Overtime is only required to be paid on actual hours worked, and does not include holiday, vacation or sick pay

Floating holidays:

If your business is one that must remain open on many holidays, you might consider giving your employees the option of “floating holidays”.  This allows them to designate holidays that are important to them.

After all, not everyone in the U.S. celebrates Christmas or Easter.  Hindus celebrate Diwali, Jews celebrate Hanukah and Muslims celebrate Eid al-Fitr.  If your business can have a flexible holiday policy, it may allow you to attract a more diverse workforce.

The wrap-up:

Just remember that all employees appreciate and need some paid time off.  Our lives are very stressful these days, and we are all more productive when we have an opportunity to be relaxed and refreshed.  While providing holiday pay is an additional expense for employers, we are repaid in the form of increased employee morale!

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