Key Highlights:
- Understand which holidays, if any, employers should observe and why
- Understand best legal practices related to holidays in the workplace
Introduction
The term “holiday” brings with it the opportunity for employees to celebrate, travel, engage in remembrance, or just kick back and watch football with your friends from your alma mater’s rival. For employers it brings the same with the added bonus of brushing up on applicable federal, state, and local laws relating to holidays. Having recently celebrated Juneteenth becoming a federally recognized holiday for the second year in a row, and with other holidays soon to follow (Labor Day and Thanksgiving), this article sets forth ten considerations for administering federal holidays in the workplace. This article explains whether private-sector employers are required to acknowledge federal holidays and provide premium holiday pay, it highlights Juneteenth National Independence Day and provides ways for companies to celebrate the holiday, and it summarizes federal contractor holiday pay requirements and religious accommodation obligations. Finally, this article underscores the importance of a holiday pay policy, identifies “do’s and don’ts” for holiday parties, and sets forth public-sector employer holiday pay requirements.
1. It Is Up to the Private-Sector Employer Whether to Acknowledge Federal Holidays.
Unless obligated by an employment agreement, collective bargaining agreement, or state law (referenced below), private-sector employers are not legally obligated to observe any particular holidays. Indeed, the federal Fair Labor Standards Act (“FLSA”) does not require payment for time not worked, such as holidays (federal or otherwise). As such, private-sector employers may choose which (if any) holidays to observe.
However, be aware of established practice or policy as “no good deed goes unpunished.” An established practice or policy may create an expectation or entitlement to the holiday depending on state-specific laws.
2. Private-Sector Employers Are Not Obligated to Provide Paid Holidays.
A common question posed is whether private-sector employers are required to provide premium pay or paid time off for holidays that it chooses to acknowledge. The answer depends on whether the employee is non-exempt or exempt.
Non-Exempt. Absent an employment contract, collective bargaining agreement, or state law (described below), private-sector employers may choose whether to provide paid or unpaid time off or premium holiday pay to its non-exempt employees for holidays.
Exempt. Exempt employees under the FLSA (who are paid at least a certain salary and meet exempt job duties requirements) in the private sector who take time off for a holiday must generally still receive their full salary for that day, so long as they work any part of the workweek in which the holiday falls. Docking an exempt employee’s pay because an employer considers holidays to be unpaid could result in the loss of that employee’s exempt classification.
3. State Laws May Require Private-Sector Employers to Provide Holiday Pay.
Rhode Island and Massachusetts require private-sector employers to provide holiday pay. Specifically, in Rhode Island, work performed on certain holidays must be paid at 1.5 times the regular rate of pay. In Massachusetts, but only until January 1, 2023, certain retailers are required to provide 1.1 times the regular rate of pay for certain holidays. Companies are advised to check their state’s laws regarding holiday pay for private-sector employers.
4. Juneteenth National Independence Day Is the Newest Federal Holiday.
On June 17, 2021, President Biden signed a bill into law making Juneteenth National Independence Day the newest federal holiday. A blend of the words “June” and “Nineteenth,” Juneteenth marks the end of slavery in the United States; in particular, Juneteenth celebrates the day in 1865 that Major General Gordon Granger of the Union Army traveled to Galveston, Texas and informed the public that the Civil War had ended, and slavery had been abolished.
To promote diversity and inclusion, many private-sector employers have chosen to honor Juneteenth through company-wide communications or events. According to an article by CNBC, numerous companies announced in 2020 they have chosen to recognize Juneteenth as a company-wide holiday, such as Adobe, Allstate, Best Buy, General Motors, Google, JPMorgan, the NFL, Nike, Postmates, Target, Uber, and Workday. Some companies give employees a paid day off, while others, like General Motors, observe moments of silence. Companies could also send out a message from senior management, host a “lunch and learn,” or donate to a charity or Historically Black College or University in honor of Juneteenth.
5. There Are Eleven Federal Holidays, but Employers Do Not Typically Recognize All Eleven.
Here is a list of the federal holidays observed by the federal government:
1) New Year’s Day (January 1)
2) Birthday of Martin Luther King, Jr. (Third Monday in January)
3) Washington’s Birthday (also called President’s Day) (Third Monday in February)
4) Memorial Day (Last Monday in May)
5) Juneteenth National Independence Day (June 19)
6) Independence Day (July 4)
7) Labor Day (First Monday in September)
8) Columbus Day (also observed as Indigenous Peoples Day) (Second Monday in October)
9) Veterans Day (November 11)
10) Thanksgiving Day (Fourth Thursday in November)
11) Christmas Day (December 25)
Inauguration Day is another federal holiday in Washington, D.C. and surrounding areas. The United States Bureau of Labor Statistics reported that, as of March 2018, paid holidays were available to 77 percent of employees in the private, state, and local government sectors. And as of March 2018 -- of all of the private-sector employees receiving paid holidays -- the following paid holidays were recognized the most (before Juneteenth became a federal holiday):
- New Year’s Day
- Memorial Day
- Independence Day (July 4th)
- Labor Day
- Thanksgiving Day
- Christmas Day
6. Federal Contractors May Be Contractually Obligated to Provide Paid Holidays.
Holiday pay requirements for federal contractors are established in the individual contracts themselves according to wage determinations under the McNamara O’Hara Service Contract Act (“SCA”) or the Davis-Bacon Act (“DBA”). Paid holidays may also be required by a separate clause. Federal contractors and subcontractors should review SCA and DBA wage determinations, as well as the contract itself, to determine whether they are required to provide paid holidays.
7. Covered Employers Must Reasonably Accommodate Sincerely Held Religious Beliefs and Practices.
Employers covered under Title VII of the Civil Rights Act of 1964 are required to provide reasonable accommodations for employees’ sincerely held religious beliefs and practices, unless doing so would impose an undue hardship on the company. A religious accommodation is an adjustment to the work environment that will allow the employee to comply with his or her religious beliefs or practices. According to the United States Equal Employment Opportunity Commission, typical accommodations include flexible scheduling, voluntary substitutes or swaps of shifts and assignments, leave, lateral transfers, changes in job assignments, and modifying employer policies.
8. Employers Should Implement Holiday Pay Policies in Their Employee Handbooks.
Written policies are important for employers establishing practices observing and/or providing holiday pay. Written policies establish clear expectations for both employers and employees. Moreover, written policies may be relied upon by employers if a dispute regarding holiday pay arises. Written policies should include, but not necessarily limited to the following considerations:
• Days observed.
• Whether holidays are only available to certain employees (e.g., long-term employees, full-time employees)
• Whether holidays are paid.
• Whether employees receive holiday pay if they have an unexcused absence the day before or after the holiday.
9. Employers Should Take Active Steps to Avoid Legal Complications From Holiday Parties.
While it is commonplace for companies to host holiday parties, they should take actions to avoid legal complications, such as claims of sexual harassment, alcohol-related accidents, and unpaid wage claims. To prevent sexual harassment, employers should ensure their anti-harassment policy covers employer-sponsored social functions. To avoid alcohol-related accidents, employers may wish to limit the amount of alcohol that is served, provide alternative transportation, and verify whether the employer is insured against Dram Shop or liquor law liability in states that recognize those claims. To avoid wage claims, employers should inform employees that attendance at is voluntary, refrain from engaging in business matters during the event, and make sure to not ask employees to perform tasks for the employer at the party.
10. Public-Sector Employers Must Provide Holiday Pay on State or Federal Holidays.
Some states have enacted laws mandating that state and local government employers honor state holidays. For example, in Arizona, state employees who are scheduled to work on a state recognized holiday may be absent with pay unless they are required to work to maintain essential state services, and non-exempt employees who are required to work must receive holiday compensation plus holiday pay. In California, state employees required to work on a state holiday must also receive holiday pay. Federal employees are also generally entitled to paid time off for holidays when excused from duty and they are generally entitled to premium pay when they are required to work on a federal holiday.
Conclusion
Although not legally required for most private-sector employers, providing premium pay to non-exempt employees who work on company-recognized holidays or providing paid time off on company-recognized holidays not only promotes a diverse and inclusive workplace, but it also boosts employee morale, diminishes employee fatigue, and serves to attract and maintain employees. Employers should consider recognizing Juneteenth as a statement of diversity and inclusion, federal contractors should take heed of contractual obligations related to holiday pay, and employers must accommodate religious beliefs and practices. Finally, be sure to implement a holiday pay policy and be proactive to avoid legal complications from holiday parties.
Authors: Shar Bahmani and Katya M. Lancero
Additional Resources
Holiday Pay, United States Department of Labor
Policy, Data, Oversight: Pay & Leave, United States Office of Personnel Management
Here’s a running list of all the big companies observing Juneteenth this year, CNBC, available here.
