Federal wage and hour law requires that overtime is paid to non-exempt employees for all hours worked over 40 in a workweek.
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.”
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.