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Holiday Pay
Holiday Pay! What is it? How does it work? Do you have to offer it?

What Is Holiday Pay?

Holiday pay can be classified as many things: a gift, an allowance, paid time off. But no matter how you view it, at the core, holiday pay is compensation for working or not working on what your company designates as a “holiday” and is usually part of your total rewards program.

Is Holiday Pay Required by Law?

Anytime you wonder if something is required by law, you want to go check your state laws to see if there are any corresponding federal laws. In the case of holiday pay, that’s the FLSA or Fair Labor Standards Act. According to the Department of Labor (DOL), the FLSA does not require employers to offer holiday pay or pay for any time that they do not work. Some states have laws restricting certain types of businesses from being open on holidays, however, this doesn’t change that the employer doesn’t have to pay employees on those days. The only exception to this is the salaried exempt employee. There are also exceptions if you have a government contract. If so, you’ll want to discuss any requirements with an attorney. Union contracts may also have a provision covering holiday pay. This US law is different from the European Union. In the EU, a law gives all employees a minimum number of paid days off for national holidays. If your business has locations in other states or countries, be sure to check their laws. When in doubt, contact an attorney to double-check.

Why Should Companies Provide Holiday Pay for Employees?

Employees Volunteer for Holidays

Last second call-offs from employees over a holiday weekend puts extra strain on the staff. Offering holiday pay for these days, such as time and a half for hours worked on the actual holiday, gives employees an incentive to come to work.

Helps Attract Talent

Recruiting is a constant challenge. Having holiday pay as part of your total rewards can give your company that competitive edge. It has become an expectation to offer holiday pay, so without it you could lose key applicants.

Improves Employee Morale

Even though we see more employees opt to work a holiday to take advantage of holiday pay, employees know they could take that time off to be with their families. Mental health is a huge issue in the workplace and adequate family time is very important for creating a happy, healthy workforce. Offering holiday pay allows employees that time without worrying about losing their pay.

Who Should be Eligible for Holiday Pay

Full-Time Employees

If your organization offers holiday pay to one full-time employee, they must offer it to all full-time employees. This needs to be specified in your company policy and given to employees at the time of hire.

Regularly Scheduled Employees

These are employees who are working regular hours and scheduled in advance. On-call and intermittent employees and consultants don’t count here.

Unions

If the union contract has a provision for holiday pay, it must be honored.

What are Common Paid Holidays?

Choosing what holidays to observe is a decision made by the organization. Federal contractors or government organizations observe all national holidays, but non-government organizations can choose. Most companies consider including designated national holidays. In Canada, there are 5 National Holidays with 6 more for Federal Contractors. In addition, each of the provinces has its own observed holidays and many businesses are closed. In the United States, national holidays are:
  • New Years Day
  • Memorial Day
  • Independence Day
  • Labor Day
  • Thanksgiving Day
  • Christmas Day
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Heather Anderson

Heather Anderson

Heather is an experienced HR and Employee Relations professional with a strong background in compliance. Heather is an advocate for learning and enjoys mentoring others to help them grow and learn. As a Society for Human Resources Certified Professional (SHRM-CP), she earned her bachelor's degree in Human Resource Management from Western Governors University and is currently obtaining her Juris Master in Employment Law and HR Risk Management from Florida State University. Heather currently serves on the Board of Directors for Utah State SHRM and has spoken at several conferences helping the new HR professionals with tips for success. She also is a mentor with LevelNext helping to educate others in HR as well as assisting with resume writing and social media optimization. When Heather is not spending time on her education or sharing her passion for the HR world, she can be found spending time with her family, playing pool, or helping create monsters for Fear Factory Haunted House here in Salt Lake as a part of the makeup team.
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Frequently asked questions
Other Related Terms
Additional Pay
Cost of Living Adjustments (COLA)
Employee Payroll Taxes
Employee Reimbursement
Executive Exemption
Geographic Pay Differentials
Grandfathering
Incentive Pay
Involuntary Deductions
Pay Adjustment
Pre-Tax Deductions
Professional Exemption
Raise
Relocation Bonus
Voluntary Deductions
Wage Garnishment
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