With the holiday season fast approaching, employers should pause to review whether their holiday pay practices comply with federal and state laws. In general, if an employer closes for a holiday, whether or not an employee must be compensated for that day will depend on whether the employee is classified as exempt or non-exempt under the federal Fair Labor Standards Act (FLSA).
Non-exempt employees generally do not need to be provided with paid holidays
Under the FLSA, employers are not required to offer paid holidays to non-exempt employees. Many employers choose to offer paid holidays to their employees as a benefit, but this compensation is not mandated by federal law.
If an employer remains open on a holiday, the employer may, as a matter of policy, offer overtime compensation to a non-exempt employee. Again, nothing in federal law requires the employer to do so, as long as the employee has not worked more than 40 hours in that week. However, certain Massachusetts retail employers are required by state law to offer premium pay to employees working on legal holidays, including Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving and Christmas.
Exempt employees may lose their exempt status if they are not compensated for a holiday
Exempt employees generally must be paid for days when the employer is closed due to a holiday. If an employer makes a deduction to an exempt employee’s salary for an absence caused by the employer or by the operating requirements of the business, including an absence caused by the business’ closure on the holiday, the employee will not be considered to be paid on a “salary basis,” and may lose his or her exempt status.
To avoid such problems, employers should generally pay exempt employees their regular salary for the workweek in which the employee performs any work, regardless of the business’ decision to close for a holiday.
Massachusetts employers face additional “blue law” restrictions
On holidays, Massachusetts employers are subject to additional complex laws, commonly known as the “blue laws,” which restrict certain activities by retail and manufacturing businesses on Sundays and holidays. The blue laws prohibit most retail businesses from opening or employing workers on legal holidays, including Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving and Christmas.
There are many exceptions to these closure laws but retail employers who are permitted to operate on a holiday are often required to offer premium pay on the holiday, and are not permitted to discipline or penalize employees who refuse to work on the holiday.
For more information about holiday pay or the Massachusetts “blue laws,” contact a member of the Employment Law Group.