My company has a holiday policy that simply lists the holidays that the company observes, but it doesn’t state how much people get paid for the holiday, or who is eligible for the holiday pay. This year, both Christmas Day and New Year’s Day fell on a Saturday, and I’m having employees pressuring me to pay them for the holidays even though they weren’t scheduled to work those days. What, if anything, does the company have to pay to the employees?
First and foremost, neither state nor federal law requires employers to recognize “holidays.” If an employer chooses to recognize a holiday, there is no law that requires employers to pay a premium rate of pay for work on those days.
If your company chooses to recognize holidays, however, you want to be sure that you have a written policy which specifically details what the company intends to provide and to whom.
Holiday Pay Policies
Courts and the state of California analyze holiday pay policies as if they are contracts. Basic contract law states that if an agreement is vague or ambiguous, such that it is capable of more than one interpretation, it will be interpreted in the manner that favors the party that did NOT draft the agreement.
What this means is that if you have a holiday policy that doesn’t address all circumstances, the court or the state Labor Commissioner will rule in favor of your employees.
At a minimum, your policy would need to explain what will happen if an employee is required to work on a day that you designate as a paid holiday.
In addition, you would want to explain what will happen if the designated holiday falls on a day that the business is closed, and/or when an employee is not scheduled to work.
You would also want to explain what, if any, prerequisites you require of your employees before they are eligible to receive the holiday pay.
Review by Legal Counsel
Once you have drafted your policy, we highly recommend that you have legal counsel experienced in wage and hour law review the agreement with you to be sure that it contains all the information necessary to convey your company’s intent related to the holiday pay.
CalChamber members can take the Holiday Pay Quiz to test their knowledge about pay for religious holidays, paid holidays and other days off that could be considered a holiday. Not a member? See what CalChamber can do for you.