The holidays can raise 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.
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 specific employees, such as full-time workers. But it must apply to all employees under that group and be used consistently.
What about 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.
Suppose the holiday falls on a non-regularly scheduled workday. In that case, you may create a policy that outlines when your company will observe the holiday, if at all, and if you will pay on the day of observance. Rules change for exempt employees when the office is closed for an entire week; contact your HR specialist for advice if this is the case with your company.