Many company leaders, and similarly their employees, think that all company paid holiday policies are created equal. After all, they reason, these are national holidays. However, this is far from reality! At least 25% of companies nationwide do not provide for any holiday pay at all. The other 75% can provide from as little as one, to as many as thirteen, paid days off. So, the higher the number of paid holidays that your company provides, the more generous your company is.
Laws Governing Holiday Pay
Currently, there are no federal laws requiring an employer to provide holiday pay for their employees. Holiday pay is strictly a voluntary benefit offered by employers who wish to foster a positive company morale and bolster employee benefits packages. Indeed, the more lucrative the holiday pay, the more likely employees are to feel valued and appreciated. Especially if this benefit is defined in relative terms, such as in an annual benefit statement.
Understanding a Typical Holiday Pay Package
Many employers provide 1-5 paid holiday days, while others offer up to 10 paid days of holiday time off. Very few will offer the full 13 days of federally-recognized legal holidays, but there’s no doubt your employees will appreciate their place of work all the more if your company does. When added to other types of paid time off, including sick leave and vacation pay, this can represent upwards of an additional 13% of the salary for each employee (e.g., $5,200 for an employee with a $40,000 annual salary if you provide paid time off for 13 holidays, 15 vacation days, 5 sick days, plus bereavement or jury time off). Of course, the final value should be detailed in the employee compensation reports provided annually to your employees.
What Are Federally Recognized Holidays?
Employers may choose to offer holiday pay for any of the following federally recognized holidays.
- New Year’s Day
- Martin Luther King Day
- President’s Day
- Easter/Good Friday
- Memorial Day
- Independence Day
- Labor Day
- Columbus Day
- Veteran’s Day
- Thanksgiving Day (2 days)
- Christmas (2 days)
Are Companies Required to Accommodate Religious Holidays?
Religious holidays can be a tricky issue for companies, depending on the number of employees on staff, especially if those employees hold drastically different religious and cultural beliefs. Legal statutes require the reasonable accommodation of religious holidays. As such, many employers will offer 1-2 floating holidays in lieu of the holidays listed above. Let’s face it, few people may choose to celebrate Columbus Day, but there may be several employees who wish to celebrate Yom Kippur. By offering floating holidays, instead of sticking strictly to the federal holiday schedule, you allow employees to select the days which mean the most to them.
Must Holiday Pay Packages Be the Same for Everyone?
As long as your policy doesn’t discriminate based on age, gender, race or other protected classifications, policies may vary based on position within the company. For example, many companies will offer holiday pay to full-time staff, but not to part-time employees. When in doubt, seek the expertise of a compensation specialist to ensure compliance with labor policies.
Holiday Pay and Overtime
Employees often believe that holiday pay equals premium or overtime pay. This is simply not true. There are no requirements that mandate an employer pay overtime for holidays. In fact, in most cases there are no requirements that stipulate civilian employers must offer paid time off for holidays, vacation or illness. But if you do, you should detail it in your annual total compensation report!
Furthermore, holiday hours cannot be factored into the overtime calculations for the employee. Employees are only eligible for overtime if the actual number of hours worked for that week exceed 40 hours (and not a combination of holiday hours and hours worked that surpass 40 hours for the week).
Documentation and Holiday Pay
Holiday pay varies greatly from company to company. As such, it is vital that organizations outline their leave and holiday policies carefully to avoid employee confusion. As long as holiday pay is offered in accordance with established company policy, employers have the flexibility to create a policy that works best for their unique environment.
Lastly, all paid leave, including holiday pay, should be documented in the annual employee compensation reports. If your company is one with a more generous holiday pay package, let your people know. Such reports provide employees with a snapshot of their total compensation picture. Affordable online reporting systems, like those offered from COMPackage, can assist your organization with creating employee compensation reports that increase overall employee morale.
Update: Here’s a new guide to understanding Floating Holiday Policy that also features a sample policy template for reference.