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Paying Employees for Holidays

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Paying Employees for Holidays
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  • Does Santa have to pay his elves for working on Christmas Eve? Does he ever give his elves Christmas off with pay? Because it's common practice to give employees a day off with pay for various federal holidays, everyone assumes it's the LAW, but it's not.

    The federal law regarding employee pay and working conditions is part of the Fair Labor Standards Act, administered by the Department of Labor. The DOL says:

    The Fair Labor Standards Act (FLSA) does not require payment for time not worked, such as vacations or holidays (federal or otherwise). These benefits are generally a matter of agreement between an employer and an employee (or the employee's representative).

    "Employee's representative" means union contract, I assume. I also don't know of any state that requires that employees be paid for holidays.

    Clarifications:

    1. If an hourly employee works on a holiday, that employee must be paid for the time worked. Federal law does not require that an employee be paid overtime for holiday work, unless that work is in excess of 40 hours a week. The Fair Labor Standards Act (FLSA) provisions require that employees must be paid overtime at the rate of time-and-a-half for hours over 40 in a week.

    2. Different types of employees can be treated differently. What you do for full-time salaried employees can be different from what you do for part-time and hourly employees. Full-time salaried employees can be given paid time off for holidays, while you can tell part-time hourly employees that the office is closed and they won't get paid for the day. You must treat all employees in each class the same, though. That is, you can't pay some salaried employees for time off on a holiday and not pay other salaried employees. That's discrimination.

    3. You can pay a premium for holiday work. While the federal law doesn't require it, if your business requires that employees work on some or all holidays, you can pay them a premium for work on holidays. Again, just be sure to treat all similar employees the same.

    It's always best to put employee policies and benefits in writing. This makes holiday pay questions easier to address. I learned a long time ago, when I worked in what was then called "Personnel" that once you give a benefit to employees, it becomes almost impossible to cancel it. Specifying holidays is limiting for you as the employer, but employees appreciate knowing when they will have a holiday.

    If you don't already have one, consider constructing an employee handbook. specifying all employee benefits an paid time off, as well as working rules and procedures.

    A final note: Independent contractors are not employees; they do not have to be paid for holidays.

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