Understanding Paid Holidays and Why Employers Want to Provide Them

By hrlineup | 02.01.2020

With the holiday season upon us, as a business owner, you are either planning to close or stay open, depending on the type of business you run. That’s perhaps why you want to understand how to handle your employees. If they break, are you required to pay them? But if they stay, do you pay them at the same rate?

The Fair Labor Standards Act (FLSA) only stipulates employers to pay for time worked. There’s no provision for payment for those on vacations or holidays. But still, we have paid holidays, paid sick leave, and paid vacations.  Nonetheless, they strictly remain a local arrangement as determined by the employer in negotiation with the employee or the employee’s representative, in most cases a union.

Why Would You Need Paid Holidays

As the boss, you are under no legal obligation to provide holiday pay. But most players chase for paid holidays, and if you don’t offer it, it may be a little challenging to get the best talent or retain employees. Thus, you can reach a compromise by picking on which holidays employees qualify for holiday pay.

As usual corporate holidays for the federal list of holidays. You should communicate these holidays in the employees’ handbook or the company policy document in detail and as clearly as possible. The details to include are:

  • Paid holiday dates.
  • Eligible employees.
  • Rates of payment: You could design a distinct pay, or stick to your standard rate. Of course, those who turn up for work on that day expect better remuneration or bonuses, which you should clearly state as well. Also, you should indicate the holiday overtime rate.
  • What happens if the paid holiday falls on a weekend?

Common Paid Holidays?

Perhaps, you wonder, which holidays are the paid holidays? There are many holidays in the calendar year, and some are the most profitable time of the year. So, you may want to stay open. But you may close during others as well.  Here are some of the most common paid holidays:

  • New Year’s Day – Jan 1.
  • Memorial Day – Last Monday of May (May 25th, 2020)
  • Easter – coincides with the vernal equinox.
  • Independence Day – 4th of July
  • Labor Day – First Monday of September (Sept 7th, 2020)
  • Thanksgiving Day – Fourth Thursday of November (Nov 28th, 2020)
  • Christmas Day – Dec 25th

How to Handle Holidays for Contract Employees

Contract employees, unlike their salaried counterparts, don’t get paid holidays as they get paid per the terms of their contract.

But we also have hourly and part-time employees. Yes, they work for your company, but you base their payment on the number of hours worked. They are, therefore, less likely to ask for paid holidays. Nonetheless, you may offer it to them as an incentive, mainly if their services are of great value to your company. Also, you don’t want them committing elsewhere during the festive season.

No law compels you to compensate your employees for the days they don’t work, but paid holidays form part of strategies to motivate them.  So, whether you remain open or closed during this festive season, you need to put a smile on their faces. You could start with the company’s end-of-year corporate holiday party!