How to Handle Holiday Requests in California

With Halloween right around the corner and a few more holidays creeping behind it, you may begin receiving requests and questions from employees about holidays. Read below for a refresher on holiday pay policies and some of our most frequently asked questions:

Are Employers Required to Provide Time Off for Holidays?

No, California law does not require employers to provide time off for holidays. It is a matter of discretion whether you want to offer time off, whether observed holidays are paid or unpaid, and whether you will pay a premium should an employee work on an observed holiday. Be sure to address these issues in your employee handbook.

Be aware of one exception, though: Employers with five or more employees are subject to state religious discrimination laws and may need to allow employees to take time off for religious observance.

Are We Required to Pay a Premium When Employees Work on a Holiday?

Maybe—it depends on your policy. Again, holiday policies are optional in California, so employers aren’t automatically required to pay premium pay when someone works on a holiday, unless it is called for in your employee handbook.

However, if your company chooses to pay employees for observed holidays, then it is recommended to pay premium pay (or provide another paid day off) when an employee is called to work on an observed holiday. Premium pay for working the holiday would be in addition to any regular wages and overtime earned that day.

Are the Rules Different for Exempt Employees?

Yes. Exempt (salaried) employees who perform any work during the workweek in which a holiday occurs must be paid their full weekly salary, whether or not they work on a holiday. For example, if you observe Thanksgiving as an unpaid holiday and your exempt employee works the week of Thanksgiving, but takes Thursday off, they are still entitled to their full weekly salary, not a pro-rated amount.

An Employee Called in Sick the Day Before the Holiday. Can We Deny Holiday Pay?

That is not a good idea. If an employee has accrued mandatory paid sick leave available and you deny holiday pay because they used sick time preceding or following the holiday, you could violate the anti-retaliation protections of the paid sick leave law. The employee may argue that you denied them additional compensation because they used a protected entitlement. So, if they used mandatory paid sick leave the day before (or day after) the holiday, we recommend still paying them for the holiday as long as they satisfy all other eligibility requirements. If the absence was not protected paid sick leave time (i.e., unexcused), then you may deny holiday pay in accordance with your policy.

Are Employees Owed “Holiday Pay” at Termination?

What if an employee quits mid-year and they demand “holiday pay” for observed holidays coming up later in the year?  Unlike vacation/PTO, traditional holiday pay is not earned and accrued (not vested) and therefore, doesn’t need to be paid out at termination.

However, be careful with floating holiday policies. If you offer “floating holidays” that are not connected to a specific event, but available to the employee to use throughout the year, it will be treated as vested time (like vacation), and this must be paid out at termination.

To avoid confusing personal holidays (for birthdays, work anniversaries, etc.), with floating holidays, make sure your policy states “employees must use the personal holiday time in the same workweek as the event.” Otherwise, you risk that the personal holiday will be viewed as a “floating holiday,” subject to payout at termination.

Drafting policies can be tricky! Contact CEA to customize your employee handbook at 800.399.5331.