It’s the most wonderful time of the year: last-minute time-off requests, people calling in sick left and right, having to come in to work on a Monday after a holiday, and, of course, that lovely Christmas song that’s been stuck in your head since you got to the office. For supervisors and HR managers everywhere, the holidays can prove to be a strenuous time of year. The time-off requests are mounting, all the while you’re encouraging everyone to use the rest of their PTO before the end of the year. Of course, you probably won’t be taking any time off while all of this is happening—you’ll be the Scrooge of the office on Christmas Eve, burning the midnight oil long after Jacob Marley and co. have departed.
We get it: Payday HCM is, after all, a company with its own HR team and time-off requests to fulfill. More than that, though, we’ve had numerous potential clients approach us struggling with all these various issues. Nobody wants to wake up to coal on Christmas morning, nor do they want to show up to work on a holiday with no presents under the tree. That’s why crafting a sound holiday policy might be the most important gift you give your team this year.
In this article, we’ll cover everything you need to know about holiday pay. We’ll start by discussing holiday pay in depth: Who gets it? Are there any requirements? How is holiday pay different from PTO? Next, we’ll discuss some tips for creating a robust holiday pay policy. Finally, we’ll take a look at the why and how a great holiday pay policy will put your entire organization into the holiday spirit.
In this article, you will learn:
- What Is Holiday Pay And How Does It Work?
- Best Practices for Creating A Holiday Pay Policy
- How Holiday Pay Can Benefit Your Business
What Is Holiday Pay And How Does It Work?
Before we create the policy, we need to ensure we have an in-depth understanding of holiday pay and how it works.
Understanding Holiday Pay
Holiday pay is the compensation employees receive either for working a holiday or for not working a holiday. In the U.S., this typically manifests as time-and-a-half, where employees working on a holiday are paid their usual standard rate plus half of that rate added on top.
Holiday pay can also take the form of bonuses or be strictly PTO in instances where employees are receiving pay when not working on a holiday. Basically, if it’s a holiday and you’re getting paid, then it’s holiday pay.
Are There Any Requirements Surrounding Holiday Pay?
There are no federal regulations dictating employers offer holiday pay. Of course, this is distinct from federal law that requires public employers to observe all 11 federal holidays, including New Year’s Day, Martin Luther King Jr. Day, Labor Day, and Christmas Day.
Under Title VII of the Civil Rights Act of 1964, employers are also required to accommodate employees’ religious beliefs or practices, which is an important consideration when looking at holiday pay.
There aren’t any federal requirements regarding the pay itself. Holiday pay could be the same pay that employees receive on any other day. As of writing this article, there are only two states that require employers to provide holiday pay: Massachusetts and Rhode Island. In both cases, employers are required to pay employees one-and-a-half times their normal rate of pay.
Generally speaking, so long as your holiday pay policy complies with all federal and state labor laws, you’re in good legal shape. Of course, there are still steps you can take to ensure your holiday pay policy goes above and beyond.
Best Practices for Creating A Holiday Pay Policy
Now that we have a better understanding of what holiday pay actually is and what’s required on the employer end, we’ll take a look at the best practices for ensuring your holiday pay policy is the best that it can be.
Determining Eligibility
The most crucial element for any holiday pay policy is outlining who actually receives it. Typically, this depends on how you’re paying out exempt and nonexempt employees as determined by the Fair Labor Standards Act.
For nonexempt employees—those who are eligible for FLSA requirements like overtime pay for working more than 40 hours per week—it’s important to outline if all nonexempt employees are eligible. Most companies will establish a minimum number of hours an employee must work in order to be eligible for holiday pay.
For exempt employees, it’s a little more common to receive holiday pay in the form of a bonus. In your policy, though, it’s most important to outline whether exempt employees will be paid for any days the company is closed for a holiday—FLSA outlines that holidays are not an approved deduction, so exempt employees must be paid during holiday closures.
Floating Holidays
Another inclusion to your holiday policy generally speaking is floating holidays. According to the Society of Human Resource Management, these are 2-3 holidays, typically paid, that employees can use at their discretion.
Seeing as not all people celebrate the same holidays, floating holidays are a great way to ensure that all of your employees are able to take the time off that they need to celebrate their own respective holidays. It also leaves the door open for employees to be able to take time off for other occasions like birthdays.
How Holiday Pay Can Benefit Your Business
Now that you’ve got your holiday pay policy all typed up, it’s time to go over the benefits you can potentially expereince from a robust holiday pay policy.
Workplace Culture
A good holiday pay policy can have a large impact on workplace culture. When it comes to things like time-off, providing employees with the most amount of control often results in an increased sense of appreciation. This can help increase overall job satisfaction.
The holiday season is also an important time for preventing things like burnout. Towards the end of the year, it can become hard to push through those final days of the year. Ensuring your employees have a few days off where they know they’ll be paid can help to stave off the end-of-the-year burnout and ensure productivity remains high.
Hiring and Retention
Holiday pay can also be a great hiring tool as well as a way to ensure current employees stay with your organization. Seeing as holiday pay is often viewed as a benefit, potential employees pay be weighing one organization’s benefits over another. Holiday pay could be another thing to tip them towards your business.
On the flipside, you also have employees currently within your organization who would feel appreciated by a good holiday pay policy. This can help retain your top talent within your organization by providing benefits that improve the overall company culture.
Unwrap The Gift Of Holiday Pay
For a time of the year that seems to be so focused on getting cozy and snuggling up beside the fire, the holiday season is remarkably stressful. Not only is it the end of the year where you’re working harder than ever to secure new clients or retain current ones, you also have to worry about the gifts you’re going to get everyone, whose in-laws your spending the holidays with, and who’s going to be watching the kids while they’re out of school. It can be a lot, but having a good holiday pay policy can help you and everyone in your organization rest just a little bit easier.
Of course, holiday pay is the only benefit that you can gift to your employees this season. Let us help you ensure all of your benefits are up to snuff, including your PTO policy.
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