The holiday season is here and many employees are looking forward to time off work. As a company, though, do you know what the legal requirements are for paying employees when they’re not at work?

When it comes to paying workers for holidays, the answer is simple: there are no federal or state laws that require you to pay people for time they haven’t spent working. The Department of Labor explains quite simply that “the Fair Labor Standards Act (FLSA) does not require payment for time not worked.” As such, any day taken as a holiday, be it Thanksgiving, New Year’s Day, or a religious holiday, can be considered unpaid time off. However, many companies do choose to pay their workers for some or all holidays – and it’s important to have a written agreement between employer and employee setting out exactly what the policy is.

Federal Holidays

The federal government recognizes ten holidays on which federal employees are not required to work. Many businesses take their lead from this, and offer some or all of these days as paid time off (PTO). The days are as follows:

  • New Year’s Day (January 1)
  • Birthday of Martin Luther King, Jr. (Third Monday in January)
  • Washington’s Birthday (Third Monday in February)
  • Memorial Day (Last Monday in May)
  • Independence Day (July 4)
  • Labor Day (First Monday in September)
  • Columbus Day (Second Monday in October)
  • Veterans Day (November 11)
  • Thanksgiving Day (Fourth Thursday in November)
  • Christmas Day (December 25)

Religious Holidays

At times, employees may require time off work to fulfill certain religious obligations. Title VII of the Civil Rights Act requires employers to accommodate these workers unless doing so would constitute undue hardship. In practice, “reasonable accommodations” can be as simple as allowing employees to use regular paid time off (such as personal or sick days) to fulfill their religious duties. If the employee doesn’t have any PTO days left, allowing them to take an unpaid day is perfectly acceptable. As with secular holidays, you do not have to pay an employee for taking a religious holiday.

Overtime

Time off, even if it is paid, does not have to count when calculating overtime. So, if an employee works 40 hours in a week (the threshold at which federal law requires overtime pay wages be paid) and takes a paid day off, no overtime pay is owed by the employer.

Realistically, most employers offer some paid holidays every year. A company that offers no paid time off may be putting itself at a serious disadvantage. It’s also worth noting that a potential new law, the Paid Vacation Act, was introduced in May and referred to the House Committee on Education and the Workforce. In August, Forbes reported that:

“The ‘Paid Vacation Act’ (H.R. 2096) would be the first piece of legislation to provide paid vacation time under federal law and would bring the U.S. in line with other industrialized nations, [Congressman Alan] Grayson’s office noted.

If passed:

  • Companies with more than 100 employees would be required to provide one week of paid annual leave to full-time employees.
  • Part-time workers who are employed for one year and work at least 25 hours per-week would also be covered.
  • Three years after the bill takes effect, employers with more than 100 employees would offer two weeks of vacation leave, while those with 50 or fewer employees would offer one week of paid leave.”

It would mean a big change for the U.S. working world – but for now it remains only an idea.

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