Are Employees Due Extra Pay on Holidays?

While working at the office this Thanksgiving might spare you from dinner table drama, does it also entitle you to extra compensation?

It’s often assumed that working on holidays (or even weekends) entitles hourly employees to a premium rate of pay or double overtime. We’ll cut through the myth and discover what employees are owed in the eyes of the law.

Federal Rules

When the Fair Labor Standards Act (FLSA) was signed into law 80 years ago, it established a number of firsts—child labor laws, a federal minimum wage, and the then-novel concept of overtime. While the law entitles employees to additional compensation for any hours worked over 40 in a week, it doesn’t distinguish between regular working days and holidays.

In other words, the calculus is the same regardless of the season: overtime is paid out at 1.5 times regular earnings.

Blue Laws and Holidays

At the state and local level, the rules concerning holidays are a little more complicated. While they don’t explicitly require companies to pay employees extra, most go even further by regulating which businesses are allowed to operate on holidays.

These so-called blue laws, which harken back to the notion of a religious “day of rest,” mostly apply to establishments that sell alcohol, tobacco, or automobiles. That said, states like Massachusetts apply broader rules, requiring most businesses to apply for a permit to operate on holidays like Thanksgiving and Christmas. Notably, the state also requires retailers to pay employees time and half on these occasions.

Is Double Overtime Ever Required?

Exclusive of collective bargaining agreements, there are only two instances where employees need to be paid double overtime. California labor laws entitle employees to double overtime for any hours worked over 12 in a single day. Additionally, individuals who work seven consecutive days within the same workweek are owed double for any overtime worked on that last day.

While no state has a blanket-mandate for premium pay on holidays, most businesses still offer the benefit to their employees. A survey conducted by the Society for Human Resources revealed that 57 percent of employers dole out additional compensation for work performed during company holidays—whether that means double overtime, time and a half on all hours, or just a generous gift card.

Keep in mind that businesses don’t become great places to work by just fulfilling federal and state minimum requirements. Out of all the benefits afforded to employees, time off is among the most valued. Take a thoughtful approach to holiday staffing this year and encourage employees to capitalize on your PTO offerings.

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