Time to refresh your memory on proper and timely payment for holidays, especially since July 4th falls on a Wednesday this year!
Q. Do we have to pay employees for holiday?
A. California law allows employers to adopt their own policies with regard to days off for holidays and compensation for holidays worked. It is important to know:
- California law does not require that an employer provide employees with paid holidays.
- Employers are allowed to require employees to work on holidays.
- Employees who work on a holiday are not guaranteed additional pay (see next section)
For Non-Exempt (Hourly) Employees:
- Employers can close their business on any holiday without paying employees.
- If a holiday is worked and is in addition to the regular 40-hour workweek, or if work on the holiday exceeds eight hours in a work day, overtime must be paid for the extra hours.
- Note: Any hours paid for holiday pay, but not actually worked, do not count towards overtime. So, if an employee works 40 hours and also is paid eight (8) hours in addition for holiday pay, no overtime pay is owed.
For Exempt (Salaried) Employees:
- When the company is the cause of the closure, exempt salaries cannot be docked. Therefore, an exempt employee’s salary cannot be reduced when the company closes for a holiday (or an extra day) during a workweek.
- If the employer closes for a full workweek then no salary is due (even if they collect holiday or vacation pay).
- Remember, exempt employees may be docked for days they take off for personal reasons (any time throughout the year so long as they are in four hour increments). Ask an HR Director for the CEA Fact sheet that discusses this further or visit “HR Forms” on the members only portion of the website.
Q. What if our payday falls on a holiday?
Employers should have a written policy (in their handbook or other written policy) regarding how paydays are handled if the payday falls on a holiday when the office is closed. Employees who receive pay via direct deposit should not be affected, but those who expect live checks will be impacted.
The California Department of Labor Standards Enforcement answers this question for us. If a payday falls on a holiday, employee may be paid on the next business day. Of course, you can also pay employees the day before the holiday as well. Make sure your policies are up to date and that they are followed consistently.