With limited exceptions, California law does not require employers to provide employees with a premium rate of pay for working during holidays or paid days off for holidays unless contractually obligated to do so. However, many employers chose to do so for a variety of reasons. For employers that choose to provide holiday benefits, your “presents” is requested for this read.

Why offer holiday pay?

Many employers voluntarily elect to offer holiday benefits. Some common reasons for doing so are:

• Boosting employee morale;
• Increasing company loyalty;
• Making an employment offer more valuable;
• Decreasing turnover;
• Maintaining staff during a busy holiday season; and
• Attracting a more talented employee pool.

If an employer offers holiday benefits, an agreement to do so many be seen in an offer letter, employment contract or collective bargaining agreement. Some employers also address holiday pay in their employee handbook. Since holiday pay is usually discretionary, it is important to set forth the parameters of any holiday benefits clearly to employees, as well as expectations regarding whether working on a holiday is routine for the employer’s business.

What holidays are generally recognized?

If employers provide holiday pay, generally recognized holidays include but are not limited to:

• January 1 – New Year’s Day;
• Third Monday in January – Dr. Martin Luther King, Jr. Day;
• February 12 – Abraham Lincoln’s Birthday;
• Third Monday in February – Presidents’ Day;
• March 31 – Cesar Chavez Day;
• Last Monday in May – Memorial Day;
• June 19 – Juneteenth;
• July 4 – Independence Day;
• First Monday in September – Labor Day;
• Fourth Friday in September – Indigenous Peoples’ Day
• November 11 – Veterans Day;
• Fourth Thursday in November – Thanksgiving; and
• December 25 – Christmas.

California’s legislature has proposed bills that would require certain employers to pay employees double time for work performed on Thanksgiving. However, none of those bills or any other attempts to impose mandatory holiday pay have become law.

Does an employer have to provide holiday pay?

With limited exceptions, there are no legal requirements that an employer close on a holiday, provide holiday pay, provide time off for a holiday or allow for an employe to accrue time off if they work on a holiday. An employer also does not have to compensate employees if it elects to close on a holiday. However, subject to limited exceptions, an employer cannot make deductions from exempt employees’ pay for holiday closures. Additionally, minimum wage and overtime pay laws must still be followed for non-exempt employees. For example, if Kris Kringle is schedule to work nine hours on Christmas delivering packages for his employer in California, he is entitled to his straight-time or base rate of pay for the first eight hours and one-and-a-half times his regular rate of pay for the ninth hour.[1]

Employers should also be mindful that reasonable accommodations – including time off – may be required for religious observances. Employers should assess each reasonable accommodation on an individualized basis depending on the accommodation requested and the type of business operation.

If, however, holiday pay is promised in an employment contract or collective bargaining agreement, the employer is contractually obligated to provide it. There is also an exception for some federal employees who work in California’s executive branch, corporations controlled or owned by the federal government and independent establishments or agencies within the executive branch.

How are holiday benefits provided?

Employers often pay a premium rate for hours worked on a holiday or provide a paid day off for a holiday. Such employers are typically businesses that cannot close on holidays, such as grocery stores or hospitals.

Employers that provide a paid day off are usually those that close on the holiday. In other words, the employer provides all or most employees the workday off in the form of a paid holiday. If an employer chooses to do so, the hours paid but not worked are not accounted for when determining whether an employee is entitled to overtime. Additionally, an employer is not required to pay employees for time off during a holiday if the employee is no longer employed when the holiday arrives. However, the employer’s policy should clearly state that such pay only accrues for employees who remain employed during the specific holiday.

And that’s a “wrap.”

[1] This calculation assumes that Mr. Kringle has not already exceeded 40 regular hours in the workweek.