Can I require employees to work on a holiday and how do I pay them?

Paid holidays are not required by law.

You may close your business on a holiday without being obligated to pay nonexempt employees for the day. Exempt employees, however, must be paid for the full week when you close for a holiday if they have performed any work in that workweek.

Many employers choose to provide holiday pay when they close for a holiday. Confusion often arises when an employee is required to work a day designated as a paid holiday.

Courts have held that a policy of giving a particular day off with pay creates a contract between employer and employee. If the employer subsequently requires a nonexempt employee to work on that day, the employer must compensate the nonexempt employee for the loss of that paid day off.

Options for paying employees in this situation include:

• Paying for all hours worked at the regular rate (including any overtime) plus the promised holiday pay for the day. For example, if an employee works 10 hours on a holiday, the employer would pay eight hours at straight-time, two hours at time-and-a-half and eight hours of holiday pay at straight-time.
• Paying holiday premium pay. Premium pay is typically time-and-a-half or double-time for all hours worked on a designated paid holiday, plus the promised holiday pay.
• Paying for all hours worked at the regular rate (including any overtime) and providing another day off with pay (either a day the employee chooses or one designated by the employer).

California law does not require holiday pay to be counted as hours worked for purposes of calculating overtime. Thus, an employee who performs 40 hours of work in a week and also receives eight hours of holiday pay would be paid 48 straight-time hours for the week.

If you must stay open during a holiday, an offer of premium pay may entice employees to volunteer to work on a holiday, which would avoid the challenging issue of selecting employees to work on that holiday. In some instances, however, employers will not find enough volunteers, and will have to mandate holiday work for some employees.

Many employers use a seniority system for determining holiday work assignments. However, relying strictly on seniority, either years of service or rank within the company, may hurt employee morale when junior employees discover they get tapped to work every holiday.

For fairness’ sake, employers should instead consider random or rotating holiday work assignments, or limiting the number of time off requests that will be granted on particular days in a first come, first served manner.

Keep in mind that reasonable accommodation of an employee's request to take time off for religious holidays is required unless it would cause the employer undue hardship.

Read more about Holidays in the HR Library.