Factors for Employers to Consider When Making Holiday (Pay) Plans

If we close our worksite for a holiday, do we have to pay our employees for the day?

The answer depends on the employer’s policies and whether the employee is exempt or nonexempt.

Paid Holidays

California law does not require an employer to provide paid holidays, close its worksites on holidays or grant time off to employees for holidays, with the limited exception of religious accommodations. Simply put, an employer controls how to account for holidays.

If an employer chooses to offer paid holidays or is considering expanding or reducing the number of paid holidays it already offers, the employer should commit this policy to writing in the employee handbook.

The policy should include:

• the list of the specific days observed as paid holidays;

• any employee eligibility requirements for the holiday, such as if the employees must work the day before and/or after the holiday, or whether they receive holiday pay while on an unpaid leave of absence;

• a statement that employees who are not employed at the time of the holiday do not receive pay; and

• a statement that holidays do not accrue and are not paid out upon termination of employment.

An employer that offers paid holidays also should provide guidance in its policy on how nonexempt employees will receive holiday pay if they perform work on a paid holiday. Courts have interpreted the policy of giving a paid day off as a contract to do so. Therefore, employers must make up the lost benefit to the employee in some manner.

If an employer enforces a policy requiring employees to work the day before and/or after the holiday to receive holiday pay, the employer must make sure it does not deny holiday pay in situations in which the employee was absent for a reason protected by law, such as under California’s paid sick leave law.

Holiday Closures

Although employers are not required to offer paid holidays, closing the workplace during a holiday still may result in paying employees for that day the worksite is closed, even if the employer does not offer paid holidays.

Employers are obligated to pay nonexempt employees only for the actual hours the nonexempt employee works. If an employer does not offer paid holidays and closes the worksite for the holiday, and the nonexempt employee performs no work that day, the employer does not have to pay the nonexempt employee.

Under these same circumstances, however, employers must pay an exempt employee for the full week when they close for a holiday if the exempt employee has performed any work during that work week.

Employers should consult legal counsel if they have any questions about designing and implementing an effective holiday policy or paying employees during worksite closures for holidays.

Column based on questions asked by callers on the Labor Law Helpline, a service to California Chamber of Commerce preferred and executive members. For expert explanations of labor laws and Cal/OSHA regulations, not legal counsel for specific situations, call (800) 348-2262 or submit your question at www.hrcalifornia.com.

Staff Contact: Matthew J. Roberts

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Matthew J. Roberts, a member of the CalChamber legal affairs team since July 2019, was named associate general counsel, labor and employment in October 2023. He explains California and federal labor and employment laws to CalChamber members and customers, and since October 2021 has served as manager of the Labor Law Helpline. He came to the CalChamber from the Shaw Law Group, P.C. of Sacramento, where he was a senior attorney, authored articles on emerging issues in employment law, and represented employers before state/federal employment law agencies. He received a B.A. in government from California State University, Sacramento and holds a J.D. from McGeorge School of Law, University of the Pacific, where he also served on the McGeorge Law Review as both a writer and primary managing editor. See full bio