Hey Compliance Warrior!

Today we’re addressing a few user questions regarding holiday pay!

Don’t forget to rate, review and subscribe on Apple Podcasts, Spotify, or Stitcher!
Enjoy and until next time, Be Audit Secure!

Transcription:

Lisa: And today we are talking about three big questions that we get from a lot of our members. And these are all surrounding how you pay or don’t pay people for time off due to holidays.

Mason: you could call this our holiday pay Q. And. A.

Lisa: Oh, aren’t you a poet!

Mason: Okay, All right. So, how we’re going to kind of do this is I’m going to ask you the questions and you’re going to explain it.

Lisa: Okay. Sounds good.

Mason: Okay, cool. So first our first question is if an employer has a policy that employees are not eligible for holiday pay for the first six months of employment, does that include employees that are exempt or salary?

Lisa: Okay. So, this is kind of an interesting question. So, the answer here was yes and no, because on one hand, you can have a policy that says in order to be paid for these holidays, you must first have six months of employment. Now that works very well for non-exempt employees because they’re hourly or maybe they receive a salary, but their pay is based on the number of hours that they work normally. Right. So, you can say, if we don’t work at all this day because it’s Christmas day or Thanksgiving Day or whatever, then you’re not getting paid because you didn’t perform work and you haven’t been here six months. Totally fine. However, but when they’re exempt, it gets a little more complicated.

Mason: Okay, what’s the complication there?

Lisa: Well, the complication is when an employer reduces the pay for a salaried employee for a workweek, and the holiday like is on a Wednesday, and that would be normally one of the work days that they would work. So now we have the issue with the day off for Christmas for instance, wasn’t caused by the employee.

Mason: Yeah.

Lisa: So normally what’s happening here is your business closes on Christmas day. And there’s no work to be performed. There was a department of labor opinion letter, and I’m just going to quote to you from it just briefly. It said, an exempt employee who has no accrued vacation benefits or who has a negative balance, still must receive the employee’s guaranteed salary for any absence or absences occasioned by the employer or the operating requirements of the business. Now this was wage and hour opinion letter and you can write this down or you can look in our show notes here. It’s FLSA 2005-41. Okay, so what this means is if you close on Christmas day and your employee is not working, your business is shut down, you’re not expecting work, you’re not demanding work, and that employee performs no work on that day. They are still to be paid for that entire week because it wasn’t their idea to close the business.

Mason: It wasn’t their taking a sick day or anything like that. You can’t dock it from their paid time off. If you have that in place, it’s all on the employer for shutting down the business that day.

Lisa: Right and the other thing to keep in mind too is that I had a very similar question come in from another member they’re a manufacturing plant. She said, we’re closing our plant for two weeks at Christmas for the Christmas week and the new year’s week we’re completely shutting down. Do I still have to pay my exempt employees? Yes. Because it’s not their idea to have the shutdown you as the employer created that scenario for them. So, they still get paid.

Mason: Yeah. So, does that apply to hourly employees?

Lisa: No, it does not apply to non-exempt employees.

Lisa: So yeah, absolutely.  It’s a good one to remember.

Mason: So, the next question that we’ve had a lot is how does overtime work when a holiday falls during the week, I know it’s over, 8 In a day or 40 in a week. Well, let’s say an employee works Monday through Thursday in the holiday on Friday. So, it’s already 40 hours, but they are also scheduled to work on Saturday. Is Saturday considered overtime?

Lisa: Okay. So, this particular person who wrote in was in the state of California. So that’s why, it’s mentioned here. I know it’s over 8 in a day or 40 in a week. She’s talking about over time in California, if you work more than 8 hours in a day or 40 hours in a week, it’s overtime. It’s also that way in Alaska. So just to keep that in mind, now, if you’re not in California or Alaska, then basically here you apply this to 40 hours in the 7-day work week.

Lisa: Now, so the answer to this is Saturday considered overtime with all of this? So, holidays are not factored into overtime, okay Because they are not physical hours worked unless you physically worked them but, normally we take a holiday off, there’s no work performed, right So in her scenario, let’s say that Monday through Thursday equaled 4, 8-hour days, which totaled 32 hours. And then Saturday is an 8-hour day, which is physically worked. And so, now you have 40 hours because 32 plus 8 is 40. Now we’re going to tack on the 8-hour holiday that was not physically worked, so now we have a total of 48 hours for that week but, none of that time is over time because the thing that pushed you over 40 was the holiday, which you did not work.

Mason: That’s right. That’s a nice little formula. Breakdown of it. Explanation. Basically, since the holiday fell it nullifies the overtime pay. You just pay him for the 48 hours regular pay.

Lisa: Exactly. Now, if they were in California or Alaska and they had worked 9- or 10-hour days physically, well then, those particular hours on those overtime days would count, but that’s not what we’re talking about here.

Mason: Okay, cool. Nice little clarification there. Okay, so our next question, the employee handbook States that an employee must work the day before and the day after a holiday to get paid for the holiday. An employee gets sent home from work the day after the holiday for running a fever. But, has worked six hours Can the employer refuse to pay the holiday pay? The employee showed up before and after but was sent home. They were told that because they didn’t work 8 hours, they would not be paid for it. But the handbook does not state that you must work a full 8-hour shift on both days.

Lisa:  Okay. And this was a really good one because basically, for most purposes the government at the federal and state levels, allow you to govern holiday pay as you wish. Okay. So, if you ride it correctly, like her scenario here could actually work. It wouldn’t be fair, but it could work. Okay. So fair and legal are not always the same thing. The answer to the way she presented this is probably no, this is probably not going to be allowed that they can deny holiday pay to this worker because they didn’t work the full day before because here’s the deal The employer has the right to set policy, but due to the lack of specificity regarding partial days of work, before or after the holiday, most federal and state departments of labor would likely rule in favor of the employee because the it employee was ready and available and came to work and you sent them home. They were there followed your policy. The employer caused the absence. So, holding the employee responsible here would likely not hold up. Also, if the employee is a member of a protected class, discrimination could be claimed and no one wants to fight a battle like that. So, really consider that your policies should be very specific. And if the employee did everything, they could to obey your policy and then you sent them home, see it wouldn’t be fair to say, oh you didn’t work a full day. Number one, your policy doesn’t say full day. And number two you cause the absence.

Mason: You shut down the business for that person.

Lisa: And this goes for whether they’re exempt or non-exempt or whatever. Like you cause the absence.

Mason: We’re not saying you have to pay full 8-hour days. If you send them home. On, days outside of the holiday, you need to pay him for that holiday.

Lisa: Exactly.

Mason: Because they made the effort to show up and you sent them home.

Lisa: Yeah. And very much related to this particular question, we had one that just came in yesterday, I think it was. And the question was, we have an employee who’s out on FMLA because she just gave birth to a baby and the FMLA will extend past the new year into January. The policy is much like this one that says you have to work the day before and the day after the holiday or actually there. Their language was not work. Their language was, you must be employed with our company. And so, do we have to pay her since she hasn’t been working for three months?

Mason: Yeah. Well your language says employee and it doesn’t say work.

Lisa: It didn’t say work. Yeah. And so yes, she must possibly receive pay for that. Now that being said, if, she’s only required to enjoy the same benefits under FMLA that other employees of a similar caliber would enjoy.

Lisa: So, she is employed. She’s not working. So, the language here is going to be very important but, she is still employed with the company. And if that’s your only criteria, then she should get a day of holiday pay.

Mason: Yep. So that is some good clarification on three of these kinds of topics there. It’s just at the end of it here, nobody wants to fight a battle that is likely to be lost, just use common sense. A lot of this just comes down to common sense. Check your verbiage, check your policies, make sure everything lines up. And then move forward.

Lisa: Exactly. So good deal. I think we’re set then. So, we’re going to be off now for the next two weeks because we have the week of Christmas, which is next week, and the week of new year’s, which is the following week, our support lines. Also, if you’re one of our members and we’re sending out emails and notices on this as well.

Lisa: But just FYI, just another stressing point here, our support for HR questions is going to be down between the 18th, which is probably today, the 18th that you’re listening to this and then through the end of Christmas week.

Mason: Yeah, that’s right.

Lisa: Our HR support will be back up and running the very tip end of the month where we have New Year’s Eve and New Year’s Day and all that we’ll be up and running that week, with maybe the exception of the holiday day. So, we just want to let you know if you’ve got any pressing HR questions, get them in, because from the 18th through the 27th. We’re not going to be answering those questions and our attorney will not be answering either.

Mason: Yeah, that’s right. So, okay, great. All in all, we’ll see you in 2020.