Holiday Pay Guidelines

Since the Fourth of July falls on a Saturday this year, we thought it would be a good time to discuss holiday pay for exempt employees.

Many employers plan to close on Friday, July 3 in observance of the holiday. If the employer does not have a written policy which provides for vacation pay for the day which precedes or follows a weekend holiday, there is nothing to require the employer to pay non-exempt employees. But this is not the case for exempt employees, and they should be paid for the holiday, or their exempt status may be put at risk.

Under guidelines and regulations published by the US Department of Labor (“DOL”), “exempt” employees generally must be paid a regular salary for a given workweek. This is true regardless of the number of hours they work or the quantity or quality of Under the DOL regulations, there are exceptions for certain absences, but holidays do not fall within any recognized exception.

While the DOL regulations do not specifically address unpaid holidays, and allow an exempt employee’s salary to be docked in limited situations, they do provide that an employee will not be considered paid “on a salary basis” if deductions are made “for absences occasioned by the employer or by the operating requirements of the business.” Under this regulation, if the employer decides to close on a day an employee would otherwise report to work, that is “an absence occasioned by the employer,” and the exempt employee must be paid for the day.

This is a general statement on the law as it exists today. The DOL has announced that it will change many wage and overtime regulations, probably by the end of the year. So the statements made above may or may not apply by Labor Day.

If you have any questions or comments about wage or employment issues, please feel free to contact our Hoffman Estates or Des Plaines Business Attorneys for a consultation.