Holiday Pay Practices

November 26, 2008

I came across this article and found it informative.  Please note the authors information at the bottom of the post.

The end of the year is a good time to review your company’s holiday pay practices. This article answers common questions regarding holiday pay-related issues in the United States.

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.

Must an employer accommodate an employee’s observance of a religious holiday?

An employer is obligated to provide reasonable accommodation for the religious practices of its employees, unless it can show that the accommodation would result in undue hardship for its business. Many employers offer a “floating holiday” in addition to the regularly scheduled holidays. This allows an employee to take time off for religious observances that are not covered by the employer’s established holiday schedule.

Courts addressing the issue of religious accommodation generally agree that unpaid time off can be a reasonable accommodation, as can allowing an employee to use a vacation day to observe a religious holiday. Generally, employers require that floating holidays be taken in the same year they are granted and do not allow these days to be carried over into the next year. Employees usually are required to give adequate advance notice of their intention to take a floating holiday.

Must holiday time off be paid?

For non-exempt (hourly) employees, no. An employer does not have to pay hourly employees for time off on a holiday. An employer is only required to pay hourly employees for time actually worked. On the other hand, exempt employees (salaried employees who 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. This requirement for exempt employees did not change under the new federal overtime regulations.

Must paid time off be counted as hours worked in determining whether an employee is entitled to overtime?

No. If an employer provides paid holidays, it does not have to count the paid hours as hours worked for purposes of determining whether an employee is entitled to overtime compensation. An employee must actually work 40 hours in a week before he/she is eligible for overtime. Paid time off (holidays, vacation, sick leave, etc.) is not considered time worked. Note, however, that many collective bargaining agreements include additional provisions for determining overtime.


Mel Muskovitz is an attorney who represents employers about labor and employment matters in state and federal courts and before administrative agencies. He also assists his clients to avoid legal problems by preparing or reviewing employee handbooks, conducting training, and advising on appropriate preventative measures such as employee discipline. He assists employers to comply with the Fair Labor Standards Act, the Family and Medical Leave Act, the Americans with Disabilities Act and Title VII of the Civil Rights Act of 1964. He can be reached at Dykema Gossett PLLC, Phone: (734) 214-7633, FAX: (734) 214-7696, or by Email.


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