What is Holiday Pay & How Does Holiday Pay Work?
How does holiday pay work? As per the Fair Labor Standards Act, employees are granted certain privileges for federally recognized holidays. These privileges provide a regularly scheduled employee with the right to either paid time off during a holiday or premium pay for a day of work on that holiday. The distinction between regularly scheduled employees and those in a non-pay status is important, as this determines what rights they have during a holiday.
What is the Holiday Premium Rate?
How does holiday pay work? The rate of pay for a worker during a holiday is double the rate of their basic pay. This is not to be confused with overtime pay though, as Holiday pay only applies to the first 8 hours of non-overtime work. Afterwards, the worker receives any additional amount earned at the overtime rate. In addition, employees that are given any amount of work to do on a holiday must then be paid for a minimum of two hours worth of holiday pay.
What Work is Excused?
For those on a standard work schedule, such as a full-time employee, all work that would occur in an eight hour work period is considered excused on a holiday. This also holds true for full-time employees on flexible work schedules or compressed work schedules. Interestingly, if the President issues a “half day” holiday order, then things shift slightly. Flexible work schedule workers is credited with hours for up to half of the work they completed, to a maximum of four hours. Compressed work schedule employees, however, are only entitled to basic pay for half of the hours they worked.
Part-time employees follow the same general rules as their full-time counterparts with regards to what is and is not considered holiday pay.
Overtime work on a holiday is any work that occurs outside of the eight hour limit for holiday pay. There is no special distinction between full-time and part-time employees for what constitutes overtime. It is important to note that employees are not excused from overtime work simply due to it falling on a holiday.
This type of overtime work, when required on a holiday, must be ordered or approved by the employer ahead of time. As per the regulations of the Fair Labor Standards Act, overtime pay can also occur in situations where a supervisor “suffered or permitted” an employee to perform overtime work. Interestingly, this stipulation does apply to workers under flexible work schedules.
What About Night Work?
Employees that work at night on a holiday are entitled to both holiday premium pay and their rate of basic pay. If an employee is excused from regularly scheduled night work, then they are also entitled to their basic night pay, with the same guidelines as an employee that works during the day.
Federally Recognized Holidays
The federal government recognizes ten national holidays, as well as an additional one for those that live in the Washington, D.C. area.
The following is a list of the holidays:
- New Year’s Day
- Martin Luther King, Jr. Dayy
- Presidents’ Day
- Memorial Day
- Independence Day
- Labor Day
- Columbus Day
- Veterans Day
As for those in Washington, D.C., Presidential Inauguration Day is also considered a holiday, and typically falls on the 20th of January.
What if the Holiday Doesn’t Fall on a Workday?
In situations where a holiday falls on a day that an employee does not have work, the holiday is instead considered to have taken place on the last workday preceding the non-workday.
Exemptions and Other Issues
It should be noted that, at the federal level, there is no legal requirement for small businesses, businesses that make less than $500,000 a year, to pay their employees above normal pay for work completed over a holiday. In fact, small businesses in the retail and hospitality industries can legally consider holidays to be the same as any other regular workday. As such, employees can receive normal pay for the amount of time they worked. This is due to the application of the Fair Labor Standards Act, which also exempts employees in certain industries, such as agriculture and movie theaters.
Aside from small businesses, problems can arise when two holidays occur within the same pay period. Since employees are entitled to eight hours of pay without working on a holiday, they must make up the additional time lost for a second holiday through arrangements with their employer. By taking a second holiday off within the same pay period, employees run the risk of losing their requirements for an 80-hour biweekly work requirement.
In addition, employees of the United States that are currently working in foreign areas may have certain holidays moved to occur on a Sunday rather than a Monday. This typically occurs for workers whose schedules already take place from Sunday to Thursday and only on holidays that are required by law to occur on a Monday. In those cases, the holiday is simply considered to instead occur on the preceding Sunday.
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