It’s the Holiday Season which is a time for celebration and joy. With the season typically comes paid holidays to employees and reminders to employers to set expectations for the new year regarding holiday pay. Because paid holidays are not legally required, employers have the discretion to decide whether to offer this benefit, and, if so, which holidays are included.  There have been 11 federal holidays in 2022 and additional state holidays.

Policies are specific to each employer and are all across the spectrum depending on employer needs, workforces, and employer personal preferences.  Although identifying the specific holidays by name and date on the calendar is common, some companies require their staff to be scheduled to work the day before and after the holiday to earn the benefit. Other companies exclude the benefit when the employee is already using other paid time off such as personal leave for vacation.

In addition to full disclosure to employees, there are other implications associated with paid holidays since this benefit affects other matters such as overtime pay and medical leave. For the purpose of calculating overtime, an employee’s hours worked for the week are not required to include holiday pay. This means that if you have an employee whose total hours exceed 40 but included 8 hours of paid time off for a federal holiday, the employee does not have to receive overtime pay.

Holiday pay can also impact medical leave. Under the Family & Medical Leave Act, an employee must have worked 1,250 hours in the preceding year to qualify for FMLA. Holiday pay does not count towards that eligibility requirement. Employers can also write a policy that determines whether an employee continues to collect paid holidays while using FMLA for an extended medical absence. Similarly, under Maryland’s Healthy Working Families Act, the employer cannot deduct holiday hours from an employee’s earned sick and safe leave if the business does not operate and provides paid time off for the holiday, but if the business is open and the employee elects to use leave rather than work the holiday, then the employer can deduct the holiday hours.  

Make a New Year’s resolution now to properly inform employees of your holiday benefit policy so that the necessary parameters to earn the benefit are clear and expectations are appropriately set. If you need help in crafting a policy which is balanced for all needs, please reach out to RKW.

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