Overview: Holiday pay is not required by law. Rather, it is at the discretion of each employer. If an employer chooses to provide paid time off during the holidays (or extra pay for holidays worked), a clear written policy should set forth the rules and terms. Any employment practice that disfavors certain employees due to retaliation, discrimination, harassment, or any impermissible factor (such as gender, religion, physical or mental disability, medical condition, skin color, etc.) must be avoided. Absent a written policy, the employer’s prior actions regarding holiday pay and time off for employees could be regarded as a contract with its current employees.
Consistently Follow a Written Policy: Although the law does not require employers to give holiday pay, many employers in California and across the country provide their employees either the day off with pay or the employer pays extra for holiday hours worked. The most common paid holidays include New Year’s Day, Memorial Day, Easter, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. Several studies have found that providing paid time off during the holidays (and/or providing extra pay for work performed) increases employee morale, productivity, and longevity with their employer.
Savvy employers create, maintain, and closely follow a written policy regarding holiday pay, paid time off, vacation time, sick pay, jury duty obligations, etc. If an employer chooses to provide paid time off for holidays or to provide extra pay for hours worked during holidays, they must consistently follow their own holiday-related policies. Disfavoring certain employees for any impermissible reason is prohibited and could lead to complaints and litigation. For instance, if any holiday policies are not equally applied to certain employees due to any protected characteristics of the employees (such as gender, religion, physical or mental disability, medical condition, skin color, etc.), the failure to give them holiday pay would likely constitute a form of discrimination and/or harassment. This should be avoided at all costs.
No Obligation to Close or Pay Extra: The law does not require that (i) an employer provide its employees with paid time off during any holidays, (ii) an employer close its business on any particular holiday, (iii) employees be given the day off for any particular holiday, or (iv) employees are paid extra for working on any holidays. Hours worked on holidays, Saturdays, and/or Sundays are treated like hours worked on any other day of the week, month, or year. Additionally, no special premium must be paid for work performed on a holiday other than the usual overtime premium required for work performed in excess of 8 hours in a workday or 40 hours in a workweek (which applies regardless of whether a holiday is at issue). If an employee works on a holiday, they are paid their usual rate of pay unless it is the employer’s policy or prior practice to pay extra, such as time-and-a-half.
Conclusion: If an employer closes its business on any holidays, gives employees paid time off for any holidays, or pays extra for holiday hours worked, such a circumstance exists either (i) pursuant to a policy or practice adopted by the employer, (ii) pursuant to the terms of a collective bargaining agreement, or (iii) pursuant to the terms of employment agreements between the employer and its employee. The best way to handle this issue is to have a written policy that clearly addresses the employer’s rules and to apply such policy evenly across the board. No employee, or group of employees, should be singled out based on any impermissible or discriminatory basis. If an employer desires to have different holiday-related policies apply to different employee groups or classes (such as office workers versus “out on the field” workers), then it should be clearly stated in the policy along with the rationale for the legitimate business need for such disparity of treatment. Employers should consult with experienced legal counsel to formulate their specific policies.