Holiday Pay Got You Perplexed? We’ve Got You Covered!


Holiday Pay Got You Perplexed? We’ve Got You Covered!
by Rebecca Boartfield

Memorial Day is coming up, and for many of us that means it’s a holiday. Often, that can also mean questions from your staff about holiday pay. To help you out, we thought we’d provide a holiday pay Q&A to answer many of the typical concerns. 

Is holiday pay required? 

While there are a few states with some holiday regulations, for the most part, no, holiday pay is not required. Whether or not you choose to provide any holiday pay is up to you.

Rhode Island and Massachusetts have holiday pay regulations, but those states also have numerous exceptions, so not all employers are required to comply. In addition, Massachusetts, New Hampshire, Oregon, and Tennessee have regulations around providing Veteran’s Day off to qualified Veterans.

Am I required to offer time off, whether paid or unpaid, for federally-recognized holidays? 

Federal holidays are not applicable to private employers. While you may provide paid or unpaid time off for federal holidays, private sector employers are not required to do so. 

Do we have to pay for the holiday even if it falls on a day we aren’t open?

It depends on your office policy. Since providing holiday pay is generally discretionary, then which holidays you provide and whether they are paid during non-work days is also up to you. 

Therefore, employers may have a policy that provides holiday pay no matter when the holidays fall, or they may have a policy that only provides holiday pay when the holidays fall on a day the office is usually operating but is closed in observance of that holiday. In the former situation, employees would get extra pay for the week. In the latter, employees would get no holiday pay if the office is not typically open on the day the holiday falls. 

It is not unusual for businesses to close either the day before or after in observance of the holiday when it falls on day they don’t usually work. Most often, this is the case for Saturday and Sunday holidays. In that case, the observed day off becomes the paid holiday for the week. 

Whatever your written or unwritten policy is, you must follow it until or unless it is changed and all employees are properly informed of those changes, preferably signing an acknowledgement form after having read the new policy. 

Memorial Day is a paid holiday at my office, and it falls on a Monday. I have a full-time employee who works Tuesday through Friday. Is she eligible to receive holiday pay even though she doesn’t normally work Mondays?

As with the question above, this will also depend on your policy. It may be paid or it may not, and the policy should include that kind of eligibility criteria within it. 

In general, holiday pay is considered a wage replacement benefit, meaning it is designed to ensure employees don’t lose pay for the week simply because the office was closed. It is not specifically intended to provide extra pay beyond what they’d normally receive. As such, most policies will exclude employees who don’t typically work on the days the holiday closure occurs.  

We normally take Memorial Day as a paid holiday, but this year we’re going to remain open and work. Do they get holiday pay in addition to wages for working? For their wages, do I have to pay them time and one half for working on a holiday?

If you choose to remain open during what would otherwise be a paid holiday, you may do any of the following:

  • Pay them holiday pay in addition to their working wages
  • Pay them only their wages for the day and cancel the paid holiday entirely
  • Provide another day off in the future as a substitute and provide holiday pay for it

Whatever you choose to do, this must be decided on and communicated to your employees in advance. Failing to do so may create internal conflict and other challenges for not adhering to your policies and benefits. 

As for wages, unless you are in a state with holiday pay requirements, as noted above, premium pay for working on a holiday is not required in non-union, private sector employment. However, the hours worked on a holiday may require overtime pay if the total hours worked by the employee exceed daily and/or weekly overtime laws. 

We only work a half day on Mondays. Do we have to pay them for 8 hours if it’s a holiday?

Not to be too repetitive here, but it will depend on your policy. While holiday pay is usually a replacement of hours the employees would’ve otherwise worked, it does not have to be. In this case, holiday pay could be only 4 hours (half day), or it could be a full 8 hours. Likewise, if employees normally work 10 hours, holiday pay could be limited to 8 hours. The important part is to decide how holiday pay will be administered, communicate it to all employees, and apply it consistently with everyone. 

Are part-time employees eligible for holiday pay? 

Only if your policy provides holiday pay for part-time employees, and they meet any other applicable eligibility requirements. 

Can I require employees to work the day before and the day after a holiday in order to receive holiday pay? I don’t want to reward employees who call in “sick” and get more time off around the holiday. 

For the most part, this will be allowable. If you reside in a state/city/county that mandates sick leave, however, then this may cause problems, particularly if the employee is able to use their sick leave benefits for the extra time off they took. Taking away holiday pay when someone exercises their rights regarding sick leave can be viewed as retaliation or discrimination and cause problems. 

It may be best to provide the holiday pay and monitor the situation. If the employee shows a pattern of always being “sick” around a holiday, then this could be addressed and possibly lead to termination if the pattern continues.

Can I exclude employees from holiday pay until they’ve worked for me at least 6 months?

Yes, building in length of service requirements for receiving holiday pay is normal and allowable. While this rule usually applies to the first 90-days of employment, it could be as much as 6 months or a year, if you prefer. 

Got more questions? Let us know! Happy holiday everyone!