The holidays can bring up confusing questions on how to pay your employees, especially since there are different rules for employees who are exempt or not exempt from overtime pay under the Federal Labor Standards Act (FLSA) regulations. Here is a quick guide on how to pay each group during the holidays.
Holiday Pay for Nonexempt Employees
Nonexempt employees are those who must be paid an overtime rate of 1.5 times their regular rates of pay when working more than 40 hours in a week. As a reminder, the overtime pay must be paid on the next regularly scheduled paycheck and cannot be delayed or exchanged for paid time off to be used at a later date.
If your business is closed on a holiday, the FLSA does not require payment to your nonexempt employees for time not worked. However, if your company does pay holiday pay as a general practice, you are bound to company policy.
There is no FLSA requirement to pay a shift differential or premium for working on holidays, but again, if your company practice is to do so, you are bound to that company policy and must apply it equally and nondiscriminatorily among all employees.
Holiday Pay for Exempt Employees
Exempt employees do not have to be paid overtime pay. Their professions are ones that require independent, original, or advanced thought that is of significance to the company’s operations and therefore may not be completely encompassed in a 40-hour workweek. Please refer to the FLSAs various Fact Sheets or contact your HR Consultant at Nextep for more information on overtime exemptions.
If your company is closed on a holiday during a day of the week that the employee is regularly scheduled to work, the exempt employee must be paid for that time. Under the FLSA, an exempt employee’s pay cannot be docked for being absent because of an operational requirement, such as the company closing shop for the day.
If the company is closed for the entire workweek, the employee’s pay may be deducted for that week, but only if no work whatsoever, including checking company emails on a mobile device, was performed during that entire week.
For human resource guidance in determining how to properly pay your employees during the holidays, please contact Nextep’s HR Department.