Holiday Pay In California: Everything You Need To Know

The holidays are right around the corner. And, as an employer, that means you probably have some questions on holiday time off—and holiday pay—for your employees. 

For example, do you need to close your business on major holidays like Thanksgiving Day, Independence Day or New Year’s Day (or less celebratory holidays like Labor Day, Columbus Day, or George Washington’s birthday)? If you do shut down for the holidays, are you required to offer paid holidays to your staff? And if you don’t close—and opt to stay open—do you need to provide any sort of premium pay to your employees that work their way through the holidays?

Just in time for the holiday season, let’s take a deep dive into everything California employers need to know about

Are You Required To Give Your Employees Paid Time off For Holidays? Employment Law Around The Holidays

So, first things first—what are the labor laws around paying your employees for holidays?

Under California law, employers are not required to close their businesses for the holidays, give their employees the day off for any particular holiday, or offer premium pay if their employees work on a holiday. If an employer does decide to close their business for holidays, they’re also not required to provide paid days to their employees to cover those holidays.

So, does the law require you to provide paid holidays or give your employees any extra pay when they work on a holiday? No. 

Exempt Employees And Holiday Pay

As mentioned, if you close for the holidays, you’re not required to provide pay to your employees while you’re closed. The only exception to that rule is exempt employees.

Exempt employees’ pay isn’t based on the number of hours they work; they’re paid a salary based on their job responsibilities. So, if you opt to close for a holiday, it doesn’t matter that your exempt employees are going to be working fewer hours that week—they’re still entitled to their full salary for the workweek (and, as an employer, you’re required to pay that full salary). 

So, for example, let’s say you opt to close your business on Christmas Day—which, in 2020, falls on a Friday. If your exempt employees work at all Monday through Thursday of that week, they’re entitled to their full salary for the week—even though your business is closed and they’ll be at home on Christmas Day.

But just because you’re not required to offer your employees pay for holidays doesn’t mean you shouldn’t consider it.

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Providing Holiday Pay For Your Employees

As mentioned, in California, there are no laws that require you to provide holiday pay to your non-exempt employees. But just because you’re not required to provide pay for holidays doesn’t mean you can’t provide it if you want to.

Many California employers choose to offer paid holidays as a way to attract and retain top talent, improve employee morale, and show their commitment to their teams. If you’re thinking about offering paid holidays or premium pay on holidays to your team, here are a few things to keep in mind:

• Be clear on what days are considered paid holidays. In your employee handbook, you want to clearly list all paid holidays; that way, your team understands when your office will be closed, which holidays they’ll be paid for, and which holidays aren’t covered—and you can avoid any misunderstandings in the future.
• Outline your holiday payment policy... If you offer premium pay for holidays, you should also clearly outline your holiday payment structure as a company policy in your employee handbook. For example, will your employees get their regular rate of pay when they work on a holiday—or will they get extra pay? Does that extra pay increase based on the holiday? (So, for example, do you offer time and a half on Memorial Day and Labor Day—but double time on major holidays like Thanksgiving Day or Christmas Day?)
• ...and your policy on using PTO for holidays. If you plan to keep your business open for holidays, you’ll also want to outline your policy on how employees should request PTO for holidays. For example, if an employee uses PTO for Thanksgiving, can they also use it for Christmas? Is there a limit to how many employees can request off on a specific holiday? Be as clear as possible on your employer’s policy for managing holiday PTO requests; otherwise, you could find yourself dealing with vacation time requests from your entire team on major holidays like Christmas or Thanksgiving.
• Understand the connection between overtime pay and paid holidays. If you’re going to offer pay on holidays to your team, it’s important to note that overtime pay is based on time worked in California (more than eight hours in a workday or 40 hours in a workweek). As such, paid holidays wouldn’t factor into the hours needed to qualify for overtime pay.
  

Develop A Plan For Holidays And Payment That Works For Your Business

Bottom line? California puts the ball in the employer’s court when it comes to holiday pay. Ultimately, you’re not required to provide paid holidays to your employees. But if it’s something you decide you want to do for your team, the key is to develop a plan that works for your business—and then be crystal clear when communicating that plan to your employees.