Exempt Holiday Pay

by Evil HR Lady on February 19, 2010

Our company has 6-paid holidays a year. However, because of our industry we are required to work most of them with the option of being paid for them on top of the hours worked or hold the day and take it at another time (non-exempt employees).

My question is this – if an exempt employee works on the holiday:

1. Do we have to pay them on top of their normal salary and/or

2. Do we have to let them hold it and take it at another time under PTO

There are no Federal Laws requiring paid holidays (that I am aware of), but I’m not even going to begin to answer this from a legal standpoint. I’m going to answer this from a business perspective.

Your questions both start out with “Do we have to…” I added the emphasis because I want to point out what you are implying: We want to give our employees only what is required by law.

This is a recipe for failure. Employees can sense when their employers resent having to pay them. Remember, that without your employees you don’t have a job either.

I think either offering them extra pay or adding that time to their PTO bank is fine. You may run into problems with extra pay in that somebody will claim that violates the rules of exemption. I don’t think it does. Companies are allowed to give bonuses to exempt employees, and this would be a holiday bonus. That said, my preference would be for the PTO, but I’m a fan of days off. Overworked employees don’t perform as well.

So, yes, you should offer your exempt employees compensation for working on a holiday. You want them to feel like you value them. You want them to be happy to be working on the holiday, not feeling jerked around. Treat your good employees well and you’ll have plenty of good employees. Treat them poorly and you’ll eventually only have poor employees.

{ 9 comments… read them below or add one }

Anonymous February 19, 2010 at 3:22 pm

I worked for a company like this. Corporate offices got holidays off. We "got" holiday pay but only if we were supposed to be open normally on a holiday and weren't. Which rarely happened because, again, of the industry. So we basically never got holiday pay. In fact if our schedule got bumped that we were open on a weekend, it was expected we work that too. No extra holiday pay or PTO. Being unemployed sucks but I am beyond joyous I don't work at that company any more.

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Anonymous February 19, 2010 at 8:17 pm

"Treat your good employees well and you'll have plenty of good employees. Treat them poorly and you'll eventually only have poor employees." So true.

I agree that you can absolutely pay exempt employees extra money for holidays. Being exempt means that they receive a predetermined salary each week without regard to the quality or quantity of work preformed (barring some exceptions), paying them extra money on top of this predetermined amount is perfectly fine and does not violate any definition of the exemption.

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TheLabRat February 19, 2010 at 11:59 pm

Thanks for picking at the wording of the question; I had a serious knee jerk reaction to it of the "not very pretty but pretty funny" variety.

After years of retail and food service, where we were open on holidays, not getting 1.5 time (no it's not legally required but they should pay it anyway), AND without customers, that sort of thing makes me twitchy.

And people wonder why low end customer service jobs have a high turnover.

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Anonymous February 20, 2010 at 12:06 am

Pay them time and half for the holiday the are required to work and then pay them the holiday hours.

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Anonymous February 20, 2010 at 3:33 pm

Once upon a time I worked at a retail job where I had to use a time card – not punched, just handwritten – and I was expected to report my in/out time for lunch. This I did, because I'm a good employee. Invariably when I was having lunch on "my" time (meaning an unpaid 30-minute break in the back room), the owner would come in and consult with me about work-related stuff. Eventually it began to piss me off, and I started NOT clocking off for that half-hour. She indicated she was resentful of having to pay that $4 for the half-hour lunch break; I responded by saying it's not a break if I'm actually working through it. I'm a very good worker – honest, diligent, concerned with issues larger than myself, punctual, polite, and ambitious. And I deeply resented being docked that stupid $4 a day, so much so that I eventually started leaving the premises for that half-hour by walking out the front door to the park across the street where she could see me but not talk to me. The little things *really do matter.* EHRL is right (as usual!) Don't just do the minimum – do what's reasonable to retain good employees!

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Marsha Keeffer February 22, 2010 at 12:58 am

When companies think small in this area, you can bet employees are just waiting (or looking) for something better. Business owners and employers – don't make this mistake and ruin your business.

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Olivia February 23, 2010 at 9:39 pm

I remember being absolutely floored when I first learned that in the US, LEGALLY, you could require employees to work 24/7 365 days per year – the only legal ramification would be that either you would have to pay them a salary, or pay them 1.5 for 128hours of their 168 hour workweek.

Obviously, you'd have some workers comp issues when the employees dropped dead after a few days, but hey, you'd be within your legal rights as an employer.

EHRL is right. What you CAN do (legally) is very different from what you OUGHT to do. HR should work with Owner/management to decide on your strategy. Where would you rather spend the company's money…recruiting & training costs, or employee benefits? If the managers are balking, show them the financial impact of the situation. That's always your key "selling point."

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Donna July 19, 2012 at 6:40 pm

I work a 40 hour week, pay period is for 2 weeks, I work 8 hours overtime the first week, take a day off the second week, can I use PTO in the second week to make my 40 hours?

My employer tells me that if I work overtime in one of the 2 week periods, that I cannot use PTO in the other week if it puts me over 80 hours in the two week period.

My question is if this is correct way to handle this?
It seems like being punished for helping out when you work overtime one week and have something happen the other week in the pay period that causes you not to be able to work when you were scheduled.

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Not Me November 27, 2012 at 4:16 pm

*Donna, it sounds like you work what we call a “9/80″. You work 9 days and get in your 80 hours over 2 weeks. In my company if you are non-exempt (salary), then no you cannot use PTO to bump your hours and get time and a half. I am assuming you are non-exempt. If you are exempt (hourly), then the The Fair Labor Standards Act (FLSA) mandates that you be paid time and half for your 8 OT hours in the first week and then, yes, you can use your PTO make up the hours in the second week. The FSLA states that OT pay is determined by “work week” and not “pay period”. Hope this helps.

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