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Business Owner scratching head over overtime compliance

Top 3 Holiday Overtime Compliance Questions, Answered

The holiday season brings a unique blend of challenges and opportunities for employers. It's often the busiest time of the year when businesses see an increase in customer demands and seasonal activities. Simultaneously, employees are eager to request time off to celebrate Christmas Day, New Year's, and various seasonal holidays.

A crucial concern for employers arises during this time: how to effectively manage employee work schedules while remaining compliant with regulations and mitigating compliance risks. It's during this period that the need for overtime work may become essential to meet the heightened workloads. However, dealing with holiday overtime can often feel like navigating a complex compliance minefield.

This blog post should serve as a guide through this challenge. We'll address the most frequently asked questions that employers encounter during the holiday season regarding overtime hours. We hope to equip you with the knowledge and insights necessary not only to optimize your workforce effectively but also to assist with compliance with labor laws and regulations, including insights from the Department of Labor.

Let's dive into the essential questions every employer should be well-versed in to make the most of the holiday season while staying on the right side of the law and maintaining a strong compliance initiative.

1: Can employers force employees to work overtime during the holidays?

Yes, the Fair Labor Standards Act (FLSA) establishes a 40-hour workweek threshold for calculating overtime. Although, it does not set a maximum limit on the number of weekly hours that employers may require employees to work. In general, employers are free to require overtime hours and can even terminate or discipline employees who refuse overtime work.

There are some exceptions, of course. For example, if overtime violates the employment contract, creates some kind of safety risk, or would result in a violation of the Family Medical Leave Act (FMLA), employers may not mandate it.

2: If employees work on a holiday, do you have to pay them holiday or overtime pay?

Holiday pay: No federal law mandates paid holidays. Many employers offer it as a benefit to employees, often in the form of double pay (twice their normal compensation for holiday hours worked). However, that’s entirely at the employer’s discretion and it's important to communicate clearly what employees receive for holiday pay.

Overtime pay: The FLSA mandates that non-exempt (hourly) employees be paid overtime (generally 1.5 times their normal compensation) if they work more than 40 hours for the week, especially on federal holidays. If working on the holiday results in more than 40 hours worked that week, they must be paid overtime for those extra hours.

Please note that holiday pay is not relevant to this question; overtime requirements are determined based solely on hours worked. Also, the state of California has slightly different rules, and it requires overtime to be calculated on a daily basis (time worked in excess of 8 hours in a day) rather than weekly (time workers in excess of 40 hours in a week).

3: If employees do NOT work the holiday, do you have to pay them holiday or overtime pay?

Holiday pay: No federal law requires payment for time not worked. Exempt (salaried) employees must be paid their normal salary, but if a non-exempt employee does not work, they are not owed anything for it. Again, some employers may offer holiday pay as a benefit, but that’s at their discretion and often governed by a code of conduct.

Overtime: If non-exempt employees work more than 40 hours that week despite not working the holiday, they will be owed overtime pay. Otherwise, no. Exempt employees must be paid their normal salary.

Key Takeaways

In the midst of the holiday season's increasing festivities and demand, the management of employee work schedules and compliance with labor regulations is crucial. We've discussed some of the most pressing questions that employers face during this holiday season.

Remember, compliance during the holidays doesn't just include adhering to regulations. It's also about creating a culture of respect and fairness for your employees. By upholding a code of conduct that includes clear communication about holiday pay and overtime, you not only foster a positive work environment but also improve your efforts toward compliance.

As you prepare to celebrate the holiday season with your team, consider the importance of an effective compliance program. It not only helps with legal adherence but also reflects your commitment to the well-being of your employees.

CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about CoAdvantage’s ability to create an effective compliance program for your business, contact us today.