Holiday pay is an evergreen question this time of year

Posted October 24, 2016

The holiday season is very nearly upon us, and while it notably can bring joy, warmth, and celebration, it also can bring a number of stressors — both personal and professional.

To help ease some of that potential stress, here are answers to some frequently asked questions regarding holiday pay for employees:

Question: Must employers provide holiday pay for federally recognized holidays?

Answer: No. With few exceptions, employers may choose whether or not to offer holiday pay, and may choose whether to close or remain open on holidays. If you choose to remain open (or the nature of your business dictates that you remain open), holidays may be treated the same as any other workday.

Some states, such as Massachusetts, have restrictions for working on holidays, and some collective bargaining agreements may include holiday pay requirements.

Q: If employees work on holidays, must employers pay them a premium?

A: Generally, no. Employees who work on a holiday are not entitled to extra compensation or any other adjustment to pay (once again, collective bargaining agreements could be an exception to this rule).

It is up to your discretion whether to offer a premium for working on a holiday. It should be noted, however, that while paying a premium is not required by law, it is a common practice and can have a significant impact on employee morale.

Q: Can we require employees to work the days before and after a holiday to receive holiday pay?

A: Yes, you may require this for most nonexempt employees, and you may deny holiday pay if the employee calls in sick on the day before or after a holiday.

However, you cannot enforce that rule on salaried exempt or salaried nonexempt employees. Federal law prohibits deductions from the pay of these salaried employees for holiday closings, so they must receive the full salary in weeks that include a holiday.

Q: Can our policy deny holiday pay for the first 90 days of employment?

A: Yes, for most nonexempt employees. As described in the previous answer, however, you could not deduct pay from certain salaried employees for a holiday. They must receive the full salary every week, even if they are not yet eligible for holiday pay (and even if you close for a holiday).

Q: If we shut down for the week of Christmas, can we still give holiday pay?

A: Yes. As noted, holiday pay is subject only to company policy or union contracts. You may choose to provide holiday pay even if the business is closed for a week or more.

Note that exempt and nonexempt salaried employees need not be paid a full salary if they do not work for an entire workweek. Giving them holiday pay for an otherwise unpaid week does not create an obligation to pay the full salary.

Although deductions from their salaries for holidays are prohibited, they do not earn a salary if they do not work that week. You may give holiday pay during a week that would otherwise be unpaid.

Q: If a normal payday falls on a holiday, should we deliver checks early, or after the holiday?

A: The answer will depend on state law. Some states simply require providing paychecks within a specified time, such as within 15 days after the working period ends. Other states will require providing the check early if the normal payday falls on a holiday. Wisconsin employers (with few exceptions) are required to pay workers all wages earned at least monthly, with no longer than 31 days between pay periods.

About the author:

Kyra Kudick

Kyra Kudick is an associate editor at J. J. Keller & Associates, Inc., a nationally recognized compliance resource company that offers products and services to address the range of responsibilities held by human resources and corporate professionals. Kudick specializes in employment law/HR issues such as employee relations, hiring and recruiting, and training and development. She is the author of J. J. Keller’s Employee Relations Essentials manual and SUPER adVISOR newsletter. For more information, visit www.jjkeller.com/hr.