Holiday Pay – What Is the Right Way?

It’s that time of year again when we have two big Holidays close together. For a lot of companies, it becomes a slow time of year, but for some, they are putting in long hours. Every year our Payroll and HR Departments get questions regarding holiday pay and sometimes for the employer, they can be a bit confusing. One of the most asked questions is regarding payroll rules for nonexempt and exempt employees. Here is an easy reminder of how to address these types of employees.
Holiday Pay for Nonexempt Employees
If your business is closed for the holidays, the Fair Labor Standards Act (FLSA) does not require payment to your nonexempt employees for time not worked. However, if your company does pay holiday pay as a general practice, you are bound to company policy.
Holiday Pay for Exempt Employees
If your company is closed for the holidays during a regularly scheduled workday, the exempt employee must be paid for that time. Under the FLSA, an exempt employee’s pay cannot be docked for being absent because of an operational requirement, such as the company closing shop for the day. If the company is closed for the entire workweek, the employee’s pay may be deducted for that week, but only if no work whatsoever.
What is Exempt vs. Nonexempt
Exempt positions are excluded from minimum wage, overtime regulations, and other rights and protections afforded nonexempt workers. Employers must pay a salary rather than an hourly wage for a position for it to be exempt. Typically, only executive, supervisory, professional or outside sales positions are exempt positions.
Nonexempt employees, as the term implies, are not exempt from FLSA requirements. Employees who fall within this category must be paid at least the federal minimum wage for each hour worked and given overtime pay of not less than one-and-a-half times their hourly rate for any hours worked beyond 40 each week.
For more information on holiday pay, FLSA, and wage and hour compliance matters, please consult with your HR or Payroll Consultant or contact the LL Roberts Group (toll free) at 877.878.6463 and find out how a PEO can assist you and your company.  
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