Question: Do I have to pay non-exempt employees for a holiday if we are closed? Or a special rate If they work?

Answer: Probably not. There is no federal law to pay non-exempt employees for holidays if they do not work or to pay a premium rate if they do work. Massachusetts and Rhode Island are the only states to have holiday pay laws.

However, you must follow your established company policy or, in the absence of one, your past precedent.

Many companies have a policy to pay employees their regular wages if the company is closed for a holiday. 

It is also common to pay employees above their regular wages if they work on a holiday, which has the added benefit of helping to find employees willing to staff operations on a holiday. This “extra” could be time-and-a-half their regular hourly wage or their regular wages for time worked plus the regular holiday pay.

While the above applies to non-exempt employees, salaried, exempt employees will probably need to be paid for a holiday on which the company is closed due to Federal Labor Standards Act (FLSA) rules for when an exempt employee’s salary can and cannot be reduced. However, if a salaried, exempt employee needs to work, no extra pay is required, although some companies allow them to take another paid day off in the same pay period.

One other point: Often, companies can choose which holidays they observe. While some companies only observe the most common, other companies offer benefits for additional holidays such as the day before or after, depending on how it falls on the calendar. Others may observe other important religious holidays besides or in addition to the more common Christian holidays of Easter and Christmas.

Regardless of what you practice, it is critical to communicate to all employees what holidays you observe, the ones you will close, and the ones where you will be open and expect employees to work. You also need to communicate if they will receive pay for those holidays and, if some will be required to work, how scheduling will be decided for fairness.

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