Before we carve turkeys, pass the stuffing, and head into a well-earned Thanksgiving break, it’s a good time to revisit how your business handles holidays to ensure you are paying your staff correctly.
Here are some frequently asked questions and answers to review before you cut employee checks this holiday season.
1. Am I required to provide paid holidays in California?
Despite common belief, California employers are not legally required to offer paid or unpaid holidays or to close on any particular holiday. However, paid holidays remain a widely expected and valued workplace benefit.
2. Do paid holiday hours count towards overtime?
No. An employer providing time off work with pay for a holiday is not considered “hours worked,” so it does not count toward daily or weekly overtime calculations. “Hours worked” refers to “the time during which an employee is subject to the control of an employer, including all the time the employee is suffered or permitted to work, whether or not required to do so.” In other words, it refers to hours when the employee was actually working, not just the hours in which they receive pay. Furthermore, even if an employee is out for an unpaid holiday, that time does not count as hours worked for purposes of overtime calculations.
3. Do holiday hours count toward sick pay, vacation accrual, or a 90-day lookback?
No. Payments that are made when no work is performed, whether that’s due to holiday, vacation, or illness reasons, are to be excluded when determining a “regular rate of pay,” for overtime. Since holiday hours are not “hours worked,” they do not factor into:
- Sick pay calculations;
- 90 day regular rate lookback;
- Vacation accrual based on “hours worked;” or
- Overtime calculations, as discussed above.
4. Do I have to provide a paid holiday to someone who is on a leave of absence?
Case law and statutory provisions indicate that employees on a leave of absence are not automatically entitled to receive holiday pay unless explicitly provided for by the employer’s policies or agreements. This is why it is imperative that you address whether you provide paid holidays during leave in your policies. The absence of this in your policy, or any ambiguity about whether it is a benefit during leave, will lean in favor of providing the paid benefit to your employee. If you decide to provide paid holidays during leave, this should be the policy for all protected leaves of absence. For example, if you provide paid holidays for employees on a California Family Rights Act leave, you should also provide paid holidays for employees on Pregnancy Disability Leave.
5. Do I have to pay extra (e.g. “double time”) if someone works on a holiday?
No. California law does not require premium holiday pay rates just for working on a holiday, so employers only owe normal wages plus any overtime triggered by actual hours worked. However, employers may have a policy of offering a premium for taking a holiday shift. If you choose to offer an additional premium, or a higher overall rate of pay for working on a holiday, you need to clearly define this in your policy and should share it with employees as a reminder prior to the holidays.
6. Do I have to offer the same paid holidays to everyone?
No. Different categories of employees can receive different benefits. For example, if you want only exempt employees or only full time employees to receive paid holidays, you can make that distinction in your policy. However, you need to make sure that you have legitimate and lawful factors regarding which employees get the benefit to avoid the appearance of discrimination (i.e., providing different benefits based on protected characteristics is unlawful, but you can, for example, lawfully distinguish the benefit between employees who work full-time vs. part-time).
Conclusion
Employers should periodically review their holiday policies to ensure they accurately reflect how holidays are handled in practice. A well-drafted policy should clearly define eligibility for holiday pay, explain how it interacts with leaves of absence, and address other common issues. As a best practice, employers should review their Employee Handbook and related policies annually, and the end of the year is an ideal time to complete that review.
