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Make or update your Employee Handbook

Start new employment relationships with clear expectations and well-communicated policies.

Can I have different holiday pay and time off policies for different employees? 

Federal and state laws generally do not require employers to provide premium pay or days off for holidays. But they typically do require you to be fair and flexible about employees' religious customs.

State laws might make exceptions related to an employee’s protected status or the type of business in which they work. These are some examples:

  • Oregon. Veterans are entitled to a day off for Veterans Day (either paid or unpaid) unless it causes a serious problem for the employer.
  • Massachusetts. Employees in certain businesses that are open on Sundays or legal holidays usually must be paid 1.2 times their regular rate (this is expected to end on Jan. 1, 2023).

Also, under federal law, different employees may be paid differently for hours worked during holidays. It depends on whether overtime laws apply to them (nonexempt) or do not apply to them (exempt): 

  • Hourly, nonexempt employees are paid 1.5 times their regular rate for any hours over 40 in a workweek, but paid holidays do not count toward the total hours worked.
  • Salaried, exempt employees receive their regular pay if the business is open or closed for a holiday.

Whether your company offers paid holidays or not, you may want to describe your policy clearly in your Employee Handbook. It is helpful to include details like which types of workers the rules apply to. For instance, you may limit holiday pay to employees working at least 20 hours per week and offer it only to permanent rather than seasonal employees.

What should I consider when writing an inclusive holiday pay and time off policy?

Not only is it good management practice to make sure your holiday pay and time off policy includes everyone, but it is also required by federal law. Title VII of the Civil Rights Act usually requires employers with at least 15 employees to provide reasonable accommodation for employees’ religious observances, which may include time off for holidays.

Unless it causes major problems for your business, such as if Christmas Eve or Day is your busiest day, then you may want to plan to allow time off for those who ask for it to observe it as a religious holiday. Keep in mind, however, that the reasonable accommodation the law requires does not have to be a day off. Instead, it could mean providing smaller benefits like just a few hours off to attend a church service, a quiet place to pray, or the freedom to wear certain clothing.

Beyond that, however, an inclusive holiday pay and time off policy usually aims to treat all employees equally. Most U.S. companies are closed on Christmas Day, for example, but it is wise to expect major holidays in other religions and be ready to grant employee Time Off Requests for those days. 

It may not make sense to grant day off requests for seasonal retail work and other jobs that make most of their revenue during the holiday season, and you are not required to do so. Still, it is good to be clear about the expectations of the job, including how you manage compensation and time off, during the hiring process.

What options can I include in my holiday pay and time off policy to make it more inclusive?

When it comes to inclusive policies related to holiday pay and time off, employers may want to consider whether their current policies may exclude certain workers. Making sure policies are fair and enforced fairly can be complicated. Some suggestions to ensure your policies are fair and inclusive may include:

  • Using seniority, a random drawing, a rotating schedule, or another neutral method, to decide who gets time off if everyone cannot get time off for a given holiday.
  • Implement floating holidays. These are a great way to make your workplace holiday policies more inclusive. Floating holidays allow employees to take time off for the holidays of their choice.
  • Holding in-office celebrations. If done right, holiday celebrations give employees a chance to learn about different cultures and customs.
  • Certain holidays, such as Veterans Day or Martin Luther King Jr. Day, can be allowed off for your team to connect with the community through volunteer work or outreach.

The key to creating inclusive policies is to consider your workers and potential workers to ensure that no one is being unfairly excluded from receiving holiday pay or taking time off when needed for personal, religious, or family reasons.

What is a floating holiday?

One of the best ways to create a more inclusive holiday policy for your workplace is to offer floating holidays. This gives employees a set number of days to celebrate times that are special to them. These events can be religious, cultural, or something more personal.

You might start by looking at your current list of paid or unpaid holidays. Which ones are religious or not likely to be observed by everyone? You probably already provide New Year’s Day as a holiday, but what about the Lunar New Year? It is often a good idea to give employees two or three floating days off to use as they see fit.

In many employer policies, neither planned nor floating holidays can be carried over to the next year if they go unused during the year in which they are granted. If the floating holidays you provide are not enough, then employees will likely appreciate it if you let them use their personal time off or other days to celebrate. 

It may not be easy to adjust to meet everyone’s holiday time off requests, but doing so is likely to help you attract and keep a diverse staff. Besides, employees who know they are respected and valued will go that extra mile for the company. If you have additional questions about updating your holiday and time off policies, reach out to a Rocket Lawyer On Call® attorney.

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.


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