Understand how regular holiday pay works in California, including key laws, employer obligations, and effective policy strategies. Learn how businesses like Amazon and Netflix approach holiday pay to attract and retain top talent.
By Brad Nakase, Attorney
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The Fair Labor Standards Act (FLSA) states that private companies are not obligated to compensate their workers for time that they do not work. This covers paid time off, vacation, and holidays. Even though there is no law mandating it, many companies nevertheless provide paid holidays and other vacation benefits. Why? Because it can help build your company’s reputation as an attractive place to work, which in turn can help you keep good employees.
In addition to being a fantastic reward in and of itself, it helps foster an environment where employees are happy, engaged, and productive.
However, how exactly is holiday pay defined? What is the standard amount for holiday pay?
If you are an employer, you will find this employer’s guide to regular holiday pay very helpful. It covers all the bases, from examples to legislation and regulations.
Let’s begin with the fundamentals: what is the meaning of holiday pay?
During federally observed holidays, you have the option to provide your employees with holiday pay. If workers want to take the day off, they may receive paid time off in full or in part; if they decide to work instead of taking a vacation, they may receive a bonus or a higher hourly rate.
It is not mandatory by law to provide holiday pay. On the other hand, this benefit is available with other popular options including flexible scheduling, paid time off, vacation, and personal time off at many companies. Reason being, these kinds of bonuses can boost your benefits package and make it easier to entice and keep the best employees.
Having a happy and productive workforce is essential, and this can help you achieve both goals. On top of that, paying workers overtime is a terrific method to get them to put in extra hours on federal holidays.
You are not obligated to compensate your employees for the time they spend celebrating religious holidays, even though it is a requirement of federal law that you make reasonable accommodations for their celebration. As long as you follow the Fair Labor Standards Act’s regulations regarding overtime pay, you are not obligated to pay employees more for work done on holidays. Although it is not required by law, many companies nowadays do provide some kind of holiday pay to their employees.
The ones that do usually do it on holidays recognized by the federal government. This could come in the form of a paid holiday or giving workers time and a half for working on a holiday.
This could include the following holidays:
Additionally, some businesses decide to pay employees on holidays in observance of Veterans Day, Presidents Day, and Martin Luther King Jr. Both your employment contract and employee handbook should specify which holidays you want to observe.
On the other hand, government personnel are subject to a different set of regulations. Here, workers have legal protections, and government agencies are required to provide 11 paid holidays annually:
The Fair Labor Standards Act (FLSA) says that you only have to pay workers for the hours they come in. For non-exempt workers, this includes overtime compensation. As we indicated before, the sole exemption is for federal employees, who are eligible to receive holiday pay for all eleven holidays recognized by the federal government.
Employers with fifteen or more workers are required by Title VII of the Civil Rights Act of 1964 to make reasonable accommodations for sincerely held religious beliefs or practices unless doing so would result in undue hardship or inconvenience. Take this into consideration as well. Here, you can give your workers the option of taking paid or unpaid time off for religious holidays, or floating holidays that they can spend anyway they like.
In addition to the aforementioned, private sector workers are also subject to a couple of exceptions dictated by the state. Rhode Island and Massachusetts have paid vacation rules that all businesses operating in those states must follow.
As an example, in 2023, Rhode Island was the first state that ordered businesses to pay their workers more when they worked on Sundays and government holidays. Also, employers in Massachusetts cannot make their employees work on holidays because of the “Blue Laws” that make it necessary for non-retail and manufacturing enterprises to get a permission in order to operate on specific holidays. (The law used to apply to retailers as well, but that has since changed.)
If your company offers holiday pay, you should have a well-defined policy outlining the process, regardless of whether any of the above is relevant to your situation. Everything from the holidays that staff members can take off to whether or not you will pay for them to whether or not they can earn extra pay for working on those days (like time and a half) falls under this category.
When it comes to holiday pay, there’s one more thing to think about legally. You must comply with this law if your business is located in California.
California law does not mandate that businesses pay their employees on holidays. They are also exempt from paying overtime for holidays worked. Only in the following cases can an employee receive holiday pay: if it is part of the company’s benefits policy, a collective bargaining agreement, or if they have already worked more than their contracted hours that week. In the second case, you’ll have to pay your workers overtime in accordance with the Fair Labor Standards Act.
Additionally, companies operating in the state of California are not obligated by law to:
Workers would be eligible for holiday pay in these scenarios. In addition, covered workers are required to get double their regular salary for any hours performed on holidays. No matter what their employment contracts say, this also applies to part-time workers.
So, what is the amount of regular holiday pay?
When dealing with federal holidays, there are typically four ways to go:
We can learn about how popular companies deal with federal holidays by observing how they manage holiday pay.
Holiday pay at Amazon
With almost 1.1 million full- and part-time employees, Amazon is among the largest US employers. To be exact, the e-commerce giant has workers in 47 of the 50 states. An amazing 170,000 of these workers are in California.
With such a large US workforce, Amazon felt it was necessary to establish an Amazon holiday pay policy to guarantee fair treatment for all employees. All full-time employees are eligible for seven paid federal holidays each year under this policy:
There is no universally applicable holiday pay rate; rather, it is based on the specifics of each employee’s employment contract. If Amazon full-time workers want to work on a federal holiday, they will get 1.5 times their normal hourly wage.
This does not apply to the 170,000 workers in California, though. This scenario involves nine paid holidays for business employees: the ones already mentioned, plus the day following Thanksgiving and an additional day for Christmas.
Netflix
Time and a half has long been the standard for American holiday compensation. Unlimited PTO is one possibility that several organizations have begun to test out recently. When paid workers have unlimited paid time off (PTO), they are able to take as many days off as they want and still get their full salary. Time off for federal holidays, personal days, sick days, and vacations all fall under this category. The one and only stipulation is that employees’ performance and output are unaffected by their time off.
This kind of worker benefit has become more popular lately, but Netflix has been giving it to its workers since 2010. Netflix, which Forbes named one of the finest employers in the world, sought to shift its emphasis from monitoring employee hours worked to focusing more on output.
Netflix has faith in its employees to handle their own time off and performance levels rather than establishing vacation, PTO, sick leave, and holiday pay policies. Therefore, workers can take time off for federal holidays without affecting their take-home pay as long as they inform their managers in advance.
It is reasonable to assume that the policy is serving Netflix well, given that they have kept it in place for years.
Similar to full-time employees, part-time workers are not required by law to get holiday pay. Holiday pay is something that employers and employees agree upon, argues the federal government. Therefore, whether you decide to provide it to your part-time employees is entirely up to your company. Furthermore, you have the option to just pay your full-time employees during the holidays if you so desire. Be careful to spell out your holiday compensation policy in detail for both types of employees.
Here are some things to think about if you decide to provide this benefit to your employees. Here you will find all the necessary details for your holiday pay policy, as well as instructions on how to compute holiday pay.
Establish your holiday pay scale
You should start by deciding how you will determine holiday pay. Will workers be able to take time off during federal holidays at their normal rate of pay? To encourage staff to work, will you provide them with additional compensation above their regular wage? Do you plan to pay time and a half or give a bonus?
If you want to pay your employees overtime for working on federal holidays, for instance, you just need to add 1.5 times their daily rate to their pay for each holiday they worked. You must also account for the possibility that an employee may work more hours over the holiday season. Automating the procedure is possible with most payroll software packages.
Just a friendly reminder that there are no legal requirements for holiday compensation, apart from any overtime-related duties. Your internal policies will determine what you offer. You should be aware that this, along with other employee benefits, will affect your employer brand. You have a better chance of attracting and retaining top people if your benefits package is attractive.
If you’re lost on how to determine holiday pay, it’s a good idea to look at what other companies are offering by conducting market research. You can use this to help you figure out what makes you stand out in the job market.
Form a plan
Once you know what the rules are, you need to write them all down in a holiday pay policy. Afterwards, make sure that all of your employment contracts incorporate this policy. In addition to this policy, you should incorporate it into your employee handbook with other regulations about time off requests. This includes policies for unpaid time off, time in lieu, and stress leave, among others.
Your holiday pay policy should address the following issues:
First and foremost, your policy must be well-defined and easily accessible to all employees. That way, everyone on staff is on the same page regarding the process and their responsibilities.
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