With the holiday season in full swing, there’s a lot of buzz (and confusion) around holiday work and pay requirements in California.  Employers often like to be more generous this time of year but many simply are misinformed as to what they must do. Here are seven tips about holiday pay that every employer should know.

Hey Bob Cratchit, employers can require employees to work holidays.  California law does not require employers to close for the holidays. For private employees, holiday closings are a discretionary benefit.  In addition, private employers are not required to provide “holiday pay” premium for time worked during holidays, but some agree to do so. Whether a private employer is required to pay holiday pay becomes an issue of contract (i.e., your policies and past practices).

Time is a gift: Employers can require non-exempt employees to work an introductory period before receiving holiday pay.  Employers are permitted to construct their holiday pay polices for non-exempt employees to limit holiday pay to (for example) full-time employees, or employees who have successfully completed an introductory period. This can be an affordable way for employers with large seasonal workforces to reward long term employees, but without incurring the added expense of providing the same pay for part-time or temporary employees.

Employers, other than Santa, can close operations during the holidays and they won’t incur wage liability.  Employers are permitted to close their business on any holiday without paying non-exempt employees for the time off. Alternatively, an employer may close operations for the holidays and allow employees to use vacation time (or paid time off) during this period, if done pursuant to a policy or practice of the employer or pursuant to the terms of a collective bargaining agreement.

Deck the Halls…with full paychecks!  Exempt employees must be paid for non-working holiday time-off.  Due to the “salary basis” rule for exempt employees, employers usually cannot dock the pay of salaried exempt employees for individual days off during the holidays. If an employer takes deductions from the weekly salary of an exempt employee, except for specific enumerated reasons, it risks destroying the employee’s exempt status, at least for that week.

Hark!  Employers generally do not have to pay exempt employees who are off work for a full workweek and actually do no work during that period. It would be a nice practice, if an exempt employee is going to be off work for a full week without pay, to instruct the employee not to perform any work during that workweek unless requested to do so in writing.

Joy!  Paid holidays do not count towards overtime liability. Paid holidays on which employees do no work do not count as hours worked for purposes of determining overtime compensation. If a holiday is worked, and is in addition to the regular 8-hour day or 40-hour workweek, overtime (of course) must be paid for the extra hours.

Bring some figgie pudding…and holiday pay to employees on FMLA leave. Employers must treat employees on protected leaves of absence (e.g., family and medical leaves, disability and pregnancy leaves ) the same as they treat employees on other kinds of leaves. Thus, if the employer pays holiday pay to employees who are on non-protected leaves, the employer should do the same for those on protected leaves. Similarly, if an employee reduces his or her work schedule for intermittent protected leave, the employer may proportionately reduce any holiday pay (as long as it treats other non-protected leaves the same). 

Additional resources: “Holidays” are defined under Government Code Section 19853. In addition to these federal and State holidays, under Government Code Section 6700 every Sunday is considered a holiday, and under Code of Civil Procedure Section 12a, “holiday” means all day on Sundays.