Holiday Pay Policies

October 9, 2017

Topics: Employment Policies and Practices

Holiday pay policies would seem to be fairly straightforward – these are the days the company is closed for a holiday and employees will be paid for the day.

As it so happens, this is one of the policies we employment lawyers get called about frequently because the client cannot tell from their own policy if a specific employee is supposed to be paid for the holiday.

Take the example of the part-time file clerk who worked Monday, Wednesday and Friday, but from time to time changed her schedule to swap days with the company’s approval.  Every year, she switched her schedule to a certain Thursday in November when the company was, of course, closed, and demanded holiday pay.  That company’s holiday pay policy stated that employees would get paid for holidays “that fall on a day the employee is scheduled to work.”  She was scheduled to work on Thursday. Thanksgiving fell on Thursday.  Therefore, she claimed, she should be paid.  The client inquired as to whether it was legally required to pay her.  In this case, the company was not in a state that provided any guidance in this situation, except to require that companies follow their own policies.  On its face, this policy required the file clerk who was “scheduled” to work on Thursday, to received holiday pay.

A simple revision to avoid such a situation in the future is to clarify that employees will get paid for holidays that fall on the days the employee is normally scheduled to work; to require supervisor authorization to swap schedules; and to prohibit switching a working day to a holiday merely to receive holiday pay.  Alternatively, provided this is consistent with local law, the company can provide paid holidays to full-time employees only, so the schedule-swapping issue does not arise.  That, however, becomes a company culture issue and can dampen employee moral when long-time part-time employees do not get paid for holidays.

Another question that arises about holiday pay addresses the interaction of paid holidays and paid vacation.  What happens if a holiday falls in the middle of an employee’s vacation?  Does the day count as a paid holiday, or a vacation day?  While people may say “of course, it should be a paid holiday because the employee is entitled to that benefit,” if the policy is not clear confusions can arise.

Similarly, what happens if the holiday falls on a weekend or other day the company is regularly closed?  Holidays that are calendar dates (such as July 4th and December 25), rather than “the second Monday of the month” could very well land on the weekend.  In that case, unless state law dictates otherwise, companies have the option of simply not providing a paid holiday for their employees that year or of celebrating the holiday on the day before or the day after.  A company’s holiday pay policy should specify the company’s procedure in these situations.

Another issue that arises is whether employees need to receive time-and-one-half, or double time, if they work on a holiday.  Unless state law dictates otherwise (such as in Rhode Island which requires time-and-one half for Sunday or Holiday work), or the employee is a member of a union where such premium pay was negotiated as part of a collective bargaining agreement, or the employer has made such practice a part of its company policy, additional pay is not legally required on a holiday.

Have your employment policies reviewed by employment counsel to ensure that all legal bases are covered and the company is compliant with applicable law.