2023-12-05 Nextep blog - holiday pay

Ah, the holiday season—a time for joy, festivities, and the age-old puzzle of compensating your employees. Let’s demystify the rules of holiday pay for both our hourly (nonexempt) and salaried (exempt) workers.

For the Hourly Heroes

Picture your business decked out in holiday cheer, but your nonexempt employees are sipping cocoa at home. Under the Fair Labor Standards Act (FLSA), you aren’t obligated to pay them for time they didn’t work during the holiday (be sure to check state and local laws for any differences that may benefit the employee). 

However, you can create a holiday pay policy. Just remember, fairness is key! If you’re giving the gift of holiday pay, it must be consistent, fair, and apply the same rule to all workers. Pick a group, like full-time staffers, and stick to your policy.

Handling Salaried Employees

Now, imagine your company is closed for a holiday on what would have been a regularly scheduled workday, and your salaried, exempt employees are at home, singing carols in their PJs. According to FLSA, you can’t play the role of the Grinch and dock their pay just because the office is closed. They still get their paycheck, even if they’re roasting chestnuts by an open fire.

But what if the holiday lands on an irregular workday? Well, you’re in control. Craft a company policy that outlines when you’ll celebrate the holiday and whether pay is part of the celebration. Just make sure everyone’s treated the same. 

Now, if your office closes for a whole week, things get trickier. In such cases, reach out to your HR business partner at Nextep for guidance on your options.

For all the nitty-gritty details, you can dive into dol.gov, under 29 CFR 541.118(a)(1). And if you fancy some expert advice, don’t hesitate to give us a shout. We’re here to sprinkle some holiday payroll magic on your business!

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