Can an employee earn holiday pay and overtime in the same week?

With July 4th
only a few weeks away you may be designating an employee holiday during the
week of June 29th or July 6th. It’s your choice whether
you pay employees for a holiday or even give them a day off. Federal employees
will be observing the holiday on July 3rd but there is no
requirement for employers to provide a day off or holiday pay.


If you do
pay holiday pay how do you handle overtime for eligible employees?
Federal wage
and hour
law requires that overtime is paid to non-exempt employees for all
hours worked over 40 in a workweek. The key word here is “worked.”
Holiday pay is not considered hours worked
so it does not go into an overtime calculation.


If an
employee works 36 hours from Monday through Thursday and you give everyone Friday,
July 3rd off you are not required by federal law to pay overtime. Your
state, for example
California, may require overtime to be paid for
employees who work more than 8 hours in one work day. When local and state laws
get too confusing a
call to the department of labor can be helpful.


An employer
asked me last week if they could include holiday pay when calculating overtime
during one holiday week and not another. They had problems getting employees to
work during one specific week. I recommended that they adopt a consistent
policy and not pick and choose premium payments. There must be another
incentive to get employees to work on one particular holiday, call it something
else, not overtime for the week.


Other kinds
of pay for non work time are also left out of total hours for overtime purposes,
sick days, vacation, bereavement etc. Don’t wait until July 2nd to
announce your policy. Clear, consistent communication will avoid the fireworks
of upset employees who think they were
paid incorrectly.