Business Law Compliance/Best Practices Employment Law Legal Topics

Holiday Pay

Getting set for the holiday this week? Make sure that your policy on holiday pay is set too.

Although not required by law, the vast majority of employers provide their employees with paid holidays. If you or your client gives paid holidays, there needs to be a written policy on it.

A holiday pay policy should include the following elements:

  • A list of the holidays the company observes.
  • Who is eligible for holiday pay and at what rate it will be paid (e.g., straight time, overtime rates).
  • A statement that holiday pay is not counted for the purpose of calculating an employee’s overtime hours of work.
  • An explanation on how employees who actually perform work on a designated holiday will be compensated.

In addition to these elements, many employers include a statement that receipt of holiday pay is conditioned on attendance at work on the last scheduled work day before the holiday and the first scheduled work day following the holiday. This makes it less likely that employees will call in sick or otherwise not report to work the day before or after a holiday. Employers who don’t include such a provision often experience attendance problems around holidays.

Watch out for a potential trap for California employers:  the practice of granting employees “floating holidays.” A “floating holiday” is a day off that an employee can schedule independently of any other calendar event. Such days are viewed by the California Labor Commissioner as vacation time that can’t be forfeited once it is earned and that must be paid out at the time of termination. This result can be avoided by requiring that floating holiday(s) be taken on a specific day or for a certain event (e.g., birthday, work anniversary date, Thanksgiving weekend). See 2002 Division of Labor Standards Enforcement Policies and Interpretations Manual (rev 2009), §15.1.12; DLSE Opinion Letters 1992.04.27, 1986.10.28, 1986.11.04, 1987.01.14-1.

Employers that choose to give their employees true “floating holidays” should consider either

  • cashing out any unused floating holidays at year end,
  • mandating that employees schedule and actually use their accrued floating holidays, or
  • placing a reasonable cap on the number of floating holidays an employee may accrue.

For everything you need to know about workplace policies and best practices for California employers, turn to CEB’s award-winning book California Wage and Hour: Law and Litigation, chap 8.

© The Regents of the University of California, 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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