Top 3 Holiday Overtime Compliance Questions, Answered

CoAdvantage- For many employers, the holidays are their busiest time of the year, and employee workloads can increase to meet customer demands. At the same time, more employees than normal will be requesting time off to celebrate Christmas, New Year’s, and other seasonal holidays. Altogether, employers may find themselves requesting or even mandating overtime from workers, but this can present a compliance minefield. Here are the most frequently asked questions employers need to know to be successful – and compliant – with overtime during this time of year.

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, but it does not establish a maximum limit on the number of weekly hours that employee may be required to work. In general, employers are free to require overtime and can even terminate or discipline employees who refuse to work overtime. 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 holiday pay. 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.

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. If working on the holiday results in more than 40 hours worked that week, they must be paid overtime for those extra hours. Note that holiday pay has no relevance to this question; overtime requirements are determined solely based 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.

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.

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 a strategic HR function in your business that drives business growth potential, contact us today.