The holidays can bring up confusing questions on how to pay your employees. There are separate rules for nonexempt/hourly and exempt/salary employees. Here is a quick guide on how to pay both groups during holidays.
Q: Do I have to pay my nonexempt/hourly employees holiday pay while they are off for the holidays?
A: The Fair Labor Standards Act (FLSA) does not require payment for time not worked, such as vacations or holidays. 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 (for example, only full-time workers), but it must apply to all employees under that group and must be used consistently.
Q: Do I have to pay exempt/salary employees while they are off for the holidays?
A: If your company is closed on that day(s), yes. 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.
For more information, see www.dol.gov, 29 CFR 541.118(a)(1) or contact Nextep's Human Resources Department at firstname.lastname@example.org.