Ah, December—a busy and tumultuous time for many businesses . . . a time of holiday office parties, secret Santa exchanges, and most important to many—time off to spend with family and friends.  When December rolls around and employees are itching to clock out, does your company’s holiday pay policy look more like It’s a Wonderful Life or does it look more like How the Grinch Stole Christmas? Much of how your company shapes its policy will depend on the needs of the business (and of course, the holiday spirit!), but when it comes to legal requirements for holiday pay, this employer’s guide to common questions and answers can help.

Q: Must employees get paid time off for nationally recognized holidays?

A: No.  Federal law doesn’t require employers to provide holiday time off, paid or unpaid.

Q: What about accommodating a religious holiday?

A: In short, yes, employers must accommodate their employees’ religious practices unless the business would suffer an undue hardship.

What is reasonable accommodation?  Allowing an employee to use a floating holiday, a vacation day, or unpaid time off are all reasonable ways to accommodate religious observances.

Q: Must employees be paid for employer-provided holiday time off?

A: This answer depends on the employee’s classification.  Employers are not required to pay hourly employees for holiday time off; employees must only be paid for time they actually worked.  On the other hand, employers are required to pay salaried employees who work without regard to overtime for holiday time off if they worked any hours in the holiday week.

Q: Must paid time off be included in determining an employee’s entitlement to overtime?

A: No.  Employer-provided paid holiday hours are not required to count toward an employee’s hours worked ,for the purposes of determining overtime eligibility.  Typically, an employee must work 40 hours in a week to become eligible for overtime.  This may be overridden, however, by collective bargaining agreements.

Q: Can conditions be attached to holiday pay?

A: Yes, but those conditions should always be in writing.  As examples, an employer may prorate holiday pay for part-time employees or may require a certain amount of service time before an employee becomes eligible for holiday pay.

Q: If an employee works a holiday, must they get premium pay?

A: While a common practice (and a kind gesture) to pay a premium to employees who work holidays, it is not a legal requirement.

Q: Must the same holiday benefits be extended to all employees?

A: No, as long as any differences are not a result of potential discrimination, such as age or gender.  Employers can, for instance, grant holiday pay to full-time employees only, or to office workers instead of field workers.

Q: What happens if a holiday falls on an employee’s regular day off or on a non-business day?

A: No legal requirement governs this area; however, a popular practice is to allow employees to take another day off during that pay period.  This is typically seen when holidays like Christmas fall on a Sunday and employees are given the following Monday off.

When it comes to managing your company’s payroll services, GHRO can help!  Our seasoned professionals have years of experience in Human Resources and can help you develop the best policies for you and your employees.  For more information about how GHRO can meet your business needs, visit our website.