• Employers Not Required to Provide Holiday Pay for Federal Holidays

    Now that Juneteenth (June 19) has become a federal holiday, are we required to provide holiday pay to our employees for that day?

    When President Joe Biden signed the Juneteenth National Independence Day Act on June 17, 2021, creating the Juneteenth National Independence Day to be celebrated on June 19 every year, it created the 11th federal holiday and the first since the creation of the Martin Luther King, Jr. federal holiday in 1983.

    Juneteenth marks the day when federal troops entered the state of Texas in 1865 and read the Emancipation Proclamation, effectively marking the end of slavery in the United States.

    Because it has been decades since the creation of a new federal holiday, many employers in California are confused about their obligations to their employees regarding Juneteenth.

    For employers, the most important thing to know about Juneteenth and any other federal holiday is that the laws creating the holidays provide holiday pay only to federal government employees.

    Employer Discretion

    Whether a California employer chooses to provide its employees with a paid or unpaid holiday for Juneteenth or any other holiday is entirely at the employer’s discretion.

    When creating a holiday policy, employers have discretion as to which holidays to celebrate, whether the holiday will be paid or unpaid, and which class of employees are entitled to the holiday.

    But once employers establish the holiday policy, the policy has been interpreted as a contract to do so, so employers should consistently apply the policy as designed.

    The first step for employers is to determine before the start of the new year which holidays will be observed and whether the holidays will be paid or unpaid. Employers may decide when to observe holidays depending on the operational needs of the business and whether the holiday falls on a nonbusiness day.

    For example, Independence Day — a commonly observed holiday — falls on a Sunday in 2021. Businesses that are not open on Sundays may instead choose to observe another day, such as the following Monday.

    Conditions for Holiday Pay

    Next, an employer should designate which employees are eligible to receive holiday pay and whether there are any conditions the employee must meet before earning the holiday pay.

    For example, an employer could create a policy that only full-time designated employees earn holiday pay, or only employees who work the days before and after the holiday or are otherwise on paid leave such as paid sick leave or vacation, or employees must have been employed for at least 90 days. Whatever eligibility requirements the employer establishes, the employer should make sure they are well defined in the policy.

    Nonexempt Employees

    The next step for employers is to determine how to handle situations where a nonexempt employee works on one of the observed paid holidays. Because the holiday pay is interpreted as a contract to provide the day, employers must decide how to provide holiday pay to that employee. Some examples include:

    • Pay the employee for all hours worked, plus eight hours of holiday pay.

    • Pay the employee for all hours worked, plus provide a paid day off another time instead of holiday pay.

    • Pay for all hours worked at a premium rate (for example, time-and-a-half), plus eight hours of holiday pay. Also note that premium pay for working a holiday is not required, but an employer may choose to do so to incentivize employees to work the day.

    Exempt Employees

    Lastly, employers need to be aware of how holiday closures affect exempt employees. In general, if an exempt employee performs any work in a workweek, they are paid their full salary for the workweek.

    If the employer closes the business on a holiday, but does not provide holiday pay, employers will still need to pay the exempt employees’ salary if they were otherwise ready, willing and able to work.