The holidays can bring up confusing questions on how to pay your employees, especially since there are separate rules for nonexempt and exempt employees. Here is a quick reminder on how to pay both groups during holidays.
Holiday Pay for Nonexempt Employees
If your business is closed for the holiday(s), the Fair Labor Standards Act (FLSA) does not require payment to your nonexempt (also referred to as hourly) employees for time not worked. However, if your company does pay holiday pay, you are bound to company policy. You can create a policy that only pays it to certain groups of employees, such as full-time workers, but it must apply to all employees under that group and must be used consistently.
Holiday Pay for Exempt Employees
If your company is closed for the holiday(s) during a regularly scheduled workday, the exempt (also referred to as salary) employee must be paid for that time. Under the FLSA, you cannot dock employees for being absent based on an operational requirement such as the company closing shop for the day.
If the holiday falls on a non-regularly scheduled workday, you may create a policy that outlines when your company will observe the holiday, if at all, and if the day of observance will be paid. Rules change for exempt employees when the office is closed for an entire week; contact Nextep's HR Department for advisement if this is the case with your company.
For more information, see dol.gov, 29 CFR 541.118(a)(1) or contact Nextep's Human Resources Department.