November 30, 2018

The Season of Giving: Awarding Holiday Pay to Employees

by Alicia Nesline Shaw, Carlile Patchen & Murphy LLP

The holidays are fast approaching, and many employers often ponder what to do about “holiday pay”. What is it? When is it owed? For the most part, the answers are actually quite simple. Below addresses some of the most common questions and misconceptions about paying private sector employees located in Ohio at the holidays:

Neither the Fair Labor Standards Act, nor Ohio law, require a private employer to pay an employee who works any specific day of the week, holiday or otherwise, more than that employee’s regular rate of pay. Assuming the employee is not exempt from overtime pay requirements, that regular rate is only multiplied by 1.5 for hours worked over 40 in a designated workweek, regardless of whether any of those work days are holidays.

Similarly, an Ohio employer is not required to close for business on a holiday. For example, many retail stores are now open for business on Thanksgiving Day. This practice is not only completely legal, but any employee that works on Thanksgiving Day is required by law to only receive their regular hourly rate (or regular salary) for working that day, unless they are working overtime as a non-exempt employee. In addition, any regular call-off and scheduling practices of the employer can be enforced. One potential issue for employers to consider are the requirements of federal and/or state anti-discrimination laws, which may require an employer to accommodate an employee’s sincerely-held religious belief in the form of unpaid leave on a religious holiday.

An Ohio employer is also not required to pay its non-exempt employees for any time they are not working. If the employer closes for business in observance of a holiday, the employer is not required to pay its employees anything for that missed day of work, unless the employee is exempt from overtime requirements, and then the employee must receive their regular salary or risk losing their exempt status (at least for a time). If an employer chooses to pay its non-exempt workforce for a holiday on which the business is closed, the employer may condition that pay on attendance requirements for the day before and after the holiday to discourage call-offs.

Finally, if an Ohio employer provides its non-exempt employees with holiday pay, for a day on which no work is performed, the hourly equivalent does not count toward the employee’s 40 hours per workweek for overtime purposes.

Essentially, “holiday pay” is an invention of employers over the years who wish to provide additional benefits to their employees. It is not a legal designation by the FLSA or Ohio law. Any policies and practices regarding holiday pay should be communicated to employees clearly in writing, to inform employees of the employer’s expectations and avoid any confusion around this time of the year. As always, if your business employs someone in another state, always check that state’s wage payment laws for compliance.

Disclaimer: The content of this article has been prepared for information purposes only and is not legal advice. Online readers should not act upon this information without seeking professional counsel.

Nesline Shaw