Holiday pay can be a source of confusion for employers. When are employees entitled to time off for holidays, and must that time be paid? What about when employees ask off for religious holidays that aren’t on the company holiday calendar?
Private sector employers generally have full discretion over which holidays are observed by their business. For example, a company’s holiday schedule might fall squarely in line with the federal holiday calendar, or it may deviate significantly.
Your company might also have an office-wide closing for widely observed religious holidays such as Good Friday. Alternatively, perhaps you have a majority of Jewish employees and close for the High Holidays but remain open on Christmas. One popular strategy is not to acknowledge any religious holidays (except Christmas, also a federal holiday) and offer floating holidays instead.
Allowing for flexibility in personal observances is a great way to appeal to a diverse range of employees and foster inclusion in the workplace. Let’s take a look at some of the ways you can structure your paid time off (PTO) policy to achieve it.
Exempt employees generally must be paid their full salary for an entire workweek if any work is performed in that week. This means that for office-wide closings, such as holidays, an employer must provide paid time off to exempt employees if the employees have performed work during the workweek in which the holiday falls.
In contrast, non-exempt hourly employees can be paid solely for hours actually worked, absent an agreement providing otherwise. Many companies pay non-exempt employees premium pay (such as 1.5 or 2 times their regular rate) for hours worked on holidays, but this is seldom mandated by law. In some states, however, certain employers may be required to provide premium pay to employees for certain holidays.
Consider offering paid holidays to all employees regardless of exemption status. It can be a low-cost demonstration of good will that compels a disproportionate impact on morale. When you provide time off for personal and religious observances, these are typically called floating holidays.
A floating holiday is a day off from work that employees can take on a date of their choice within certain parameters, e.g. doesn’t interfere with company operations.
Floating holidays are typically in addition to the employee's regular holiday schedule.
Floating holidays are a form of personal days with limited scope. Appropriate uses include observance of religious holidays not granted off by the company, or for celebrating one’s birthday. Consider your nonreligious employees as well, and craft a policy that allows everyone to practice their own traditions.
Floating holiday policies should require advance notice from the employee, but with the presumption that the request is approved.
Unlimited PTO (Paid Time Off) is a policy without a set number of vacation days. Employees and their managers collaboratively determine the appropriate amount and particular timing of their PTO, based on factors such as personal performance and business need.
Even if your organization offers unlimited PTO, a floating holiday policy is still a worthwhile addition. Unlimited PTO is often subject to manager approval, whereas under a floating holiday policy, the time off request is presumed to be honored. Furthermore, a dedicated bank of floating holiday time encourages employees to guiltlessly take these days off, without feeling obligated to choose between a personal vacation and holiday time with family.
Under Title VII of the Civil Rights Act of 1964 and many state and local laws, employers are required to provide a reasonable accommodation to employees for religious observances, unless the employer can demonstrate that doing so would impose an undue hardship on the business. This commonly includes providing time off for religious observances. Whether that time can be unpaid depends on factors such as state law and exemption status.
More broadly, other laws that afford employees protected time off include but are not limited to:
FMLA or similar state-level protections
Leaves of absence as reasonable accommodation under the ADA
Paid Sick Leave laws on the state and local level
Paid Family Leave, a statutory benefit in an increasing number of states, which provides wage replacement for family medical situations and new child bonding
Related Article: 6 Paid and Unpaid Leave Laws Every Employer Should Know About
To satisfy compliance obligations and foster an inclusive company culture, build an empathetic mindset in how you interface with employees with respect to religious observances.
Floating holiday policies promote inclusion and safeguard against compliance liability exposure. It might seem tedious to draft an additional time off policy, but doing so will help employees feel recognized in their personal beliefs. This small act can help attract and retain the diversity of talent that your company aspires to engage.
With the HR tools available in Justworks, you can set up your vacation and sick leave policies — including a floating holiday policy — for your team in our HR platform. You'll be able to track accruals, approve PTO requests, set your holiday calendar, and sync your Justworks PTO calendar with your own. Employees can also manage their PTO and view their team’s PTO within Justworks.
Ready to learn more about how Justworks can help? Get started today.
Monthly tips on running a business in your inbox.
Scale your business and build your team — no matter which way it grows. Access the tools, perks, and resources to help you stay compliant and grow in all 50 states.