Managing Holiday Pay

You want to give your employees a few days off for the holidays. Perhaps you want to offer July 4 and 5 this year, or you’re toying with the idea of shutting down on Black Friday. How do you manage your employees’ paychecks when you do this? Do you have to pay them for the days off? The answer may depend on what type of employee they are.

Holiday Pay Policy Rules for Full-Time Employees

The Department of Labor says you do not have to pay your full-time employees for vacation days or time off for holidays. You do need to make it clear to your employees what those holidays are by printing them in an employee handbook. This ensures everyone sees the holidays and is on the same page about time off.

Holiday Pay Policy Rules for Exempt Employees

Exempt employees earn a regular salary and do not get paid based on their daily hours. Since they are paid the same amount no matter if they come into the office or not, employers are required to pay them the same amount during a holiday week as they would during a non-holiday week.

Employers do have options in this case, though. You can make the employee use vacation days or PTO to cover the holiday. But if they do not have those available — if, for instance, they already went on their vacation — then you have to pay them their regular salary regardless.

Holiday Pay Policy Rules for Non-Exempt Employees

Not every employee works full time. These days, more and more companies rely on non-exempt employees to perform critical duties. Do you owe these employees payments for holidays?

Again, the answer is no. Giving your employees a heads-up about the holiday in advance means you do not have to pay them. Still, these employees do have alternatives to ensure they get something out of the day. They can request to use vacation or PTO for these days. This way, they still get paid when they otherwise would have been working.

You can also opt to pay non-exempt employees a higher rate if they work on holidays. This allows you to give your other employees time off while still covering the duties that need to be performed. If you select this option, you will need to pay a premium over their regular rate, such as time and a half.

Keeping Employees Informed

It is up to you which holidays you recognize and what time you give your employees off of work. But you will have to detail whatever you decide in the employee handbook so that your workers understand your policies.

You should also include guidelines on holiday pay rates so employees know what they will receive if they find themselves working on a holiday. Going over these payments and policies can avoid a lot of confusion among employees by addressing them proactively.

Do you have questions about managing holiday pay? Get in touch with BCM Payroll Services, Inc. at 717-264-7374 to discuss your concerns.