What Every Small Business Owner Needs to Know About Holiday Pay

26 October, 2017

holiday payBy now your holiday preparations should be in full swing as we start the downhill roll toward the year’s end that seems to increase at warp speed after Halloween. One issue to consider before those big days arrive is holiday pay.

As a small business owner, what’s your obligation?  Are you required to pay more to those who work on Thanksgiving, Christmas Eve or New Year’s Day or pay those who take the day off? The answer is quite simple: It’s up to you. 

There are no laws that require extra payment for holiday hours. The decision to offer any extra payment to employees who work holidays is entirely up to the employer. It’s also up to the employer to decide if they want to pay employees for taking holidays off.

Typically, there are six holidays to consider: New Year’s Day, Memorial Day, July 4th, Labor Day, Thanksgiving and Christmas. Some businesses will also include Christmas Eve, the day after Thanksgiving and New Year’s Eve.

If your business is open those days, and you need staff, you may require them to work. You’re under no obligation to pay them more. You’re also not required to pay anyone who takes a holiday off or whose regular working day falls on a holiday, but many do. If you want to as an incentive to work those days and a sign of appreciation to those who do, it’s your choice.

According to the Bureau of Labor Statistics, 90 percent of full-time workers have some paid holidays, but only 37 percent of part-time workers do. If your employee base is largely part-time, holiday pay may not be as much of an issue, but if it’s largely full-time workers, then that’s another story.

So the bottom line is all about what you want to offer your employees. Is holiday pay important to you, or would you rather offer other perks to satisfy your employees instead? The most important thing is to have a formal vacation time policy so that everyone knows what to expect.


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