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If employers choose to close their offices for several days — such as the business week between Christmas and New Year’s Day — holiday shutdowns affect wages differently for exempt and nonexempt employees. Nonexempt employees don’t receive pay for any day they do not work, but exempt employees must be paid for any week in which they perform any work.
Many businesses will close for a full workweek (generally 12:01 a.m. Sunday through midnight the following Saturday). But depending on the holidays' timing and the duration of the shutdown, employers may owe exempt employees a full week’s wages for only a partial week of work.
In addition, employers may not require exempt employees to use vacation during a partial week shutdown. If the shutdown is for a full week, or if the affected employees are nonexempt, employers should still weigh the risks of mandating vacation time.
If a mandatory vacation policy would require employees to use their accrued vacation days for holiday celebrations they don’t observe, those employees could allege that the policy unfairly discriminates against them.
Such a claim is unlikely to succeed, particularly if the employer accommodates those employees’ requests to celebrate other religious holidays. Still, to best preserve employee morale and reduce the possibility of discrimination claims, employers should make vacation use for holiday shutdowns optional whenever possible.
Read more about Holidays in the HR Library.