Holiday pay rules. Companies that close on Thanksgiving Day, Christmas Day and New Year’s Day may, but aren’t required to, pay employees for that time. Rule: The FLSA doesn’t mandate that any employee—exempt or nonexempt—be paid for holidays. You could, for example, pay nonexempts for eight holiday hours, even though they normally work 10-hour days. If you do pay nonexempts holiday pay, and they work overtime during that week, don’t factor the holiday pay into their regular rate calculation when you figure their overtime rates. Rule: Holiday pay is idle time pay, which is excluded from the regular rate calculation.
What about exempts? If you close for a holiday, and you have a bona fide benefits plan, you can require exempts to take accrued time off, provided they receive payments equal to their guaranteed salary. Caution: Exempts who run out of accrued time due to current debiting, and those who have already run out of time, must still be paid their full salaries. If you shut down for an entire week, you needn’t pay exempts anything. Rule: Exempts don’t need to be paid if they don’t work for a week. They may use vacation or other accrued time, if they have it.
Holiday work rules. Depending on your company policy, nonexempts can make a substantial dent in their holiday bills by picking up overtime work. Consider these two FLSA rules.
- You don’t have to include holiday pay in the regular rate calculation for nonexempts who work through a holiday if they receive their regular wages in addition to the holiday pay. But you can’t credit this holiday pay against your obligation to pay overtime.
- If, instead of paying employees their normal wages plus holiday pay, they exchange the holiday pay for at least time-and-a-half for holiday work, you can credit that time-and-a-half premium against your obligation to pay overtime. Upshot: Employees don’t lose a dime in overtime and the company saves money.
Option 1: He gives up his holiday and works nine hours. During the week, he works 50 hours. Total pay: $630: $400 in straight-time pay, $150 in overtime and $80 in holiday pay.
Option 2: Ben trades his holiday pay for double time for the holiday work. Total pay for working nine holiday hours: $180. He still receives $400 in straight-time pay and $15 for one OT hour. Total pay: $595. Ben’s employer credits the nine hours of OT pay against the 10 hours of OT he’s owed.
Holiday hiring rules. Seasonal employees must complete W-4 forms and I-9 forms, be reported to the state as new hires and receive W-2s.
Tips: Ask to see their Social Security cards and photocopy them for your records. Also, use the Social Security Administration’s Social Security Number Verification Service to ensure that their names and Social Security numbers match; surf to www.ssa.gov/employer/ssnv.htm. If you don’t want to enroll seasonal employees into your direct deposit program, you can facilitate electronic pay by using paycards. If you opt for paycards, be sure to provide employees with all appropriate explanatory material.
