WORKPLACE LAW - Holiday Business Closures
Question:
With Christmas falling on a Monday this year, I am planning to close my business until Thursday so that my employees will have a couple of extra days for additional visiting with their families, and any necessary travel. Do I have to pay my employees for these extra two days off? It doesn’t seem like I should have to, but I wanted to make sure.
Answer:
Many employers are surprised that the law may require them to pay employees for “bonus” days off that the employer provides voluntarily. You may be required to pay your employees for these days off, even though you are not required by law to give them any extra vacation days around the holidays.
Whether you are required to compensate an employee for this time off will depend upon whether the employee is “exempt” or “non-exempt” from the California Wage Orders. Non-exempt, hourly employees are guaranteed certain protections by the Wage Orders, including overtime pay and mandatory meal and rest periods. Exempt employees—who typically receive an annual salary, and who spend at least 50% of their time engaged in managerial and other exempt duties as defined by the Wage Orders—are not entitled to these same protections.
Employers are only required to compensate non-exempt hourly employees for the time that they actually spend at work. Because of this, employers who close their businesses are not required to pay their non-exempt employees for those days when no work is performed. You said that you were planning to be closed Monday, Tuesday, and Wednesday of Christmas week. Since Monday is the actual holiday, your company’s holiday policy may obligate you to pay your employees for that day (most employers have a list of paid holidays that is set out in their employee handbook). However, you do not have to pay your non-exempt employees for Tuesday and Wednesday of Christmas week. Note that your non-exempt employees are free to use paid time off (such as accrued vacation time) on Tuesday and Wednesday if they wish.
The rule with regard to exempt employees is very different, however, and does not provide an employer with the kind of flexibility that it has regarding its non-exempt employees. Instead of an “hours worked” basis for compensation, exempt employees are entitled to receive the full amount of their compensation if they perform any work during the workweek. Practically speaking, this means that exempt employees must be paid their full salary for any week in which they perform any work at all, regardless of the number of days or hours that are actually worked. Because of this, an exempt employee who only works two days in a workweek is legally entitled to receive his or her entire salary for the week because he or she performed work that week. In light of this rule, any of your exempt employees who work on Thursday or Friday of Christmas week will be entitled to their entire salaries for that week, even though they did not work Monday, Tuesday or Wednesday.
However, you are not required to pay exempt employees for any workweek in which they perform no work at all. If you choose to close your business for a full workweek, your exempt employees would not be entitled to any salary for the week, providing they do not perform any work for you during that week.
If you decide to close your business for the whole workweek, your exempt employees may also elect to utilize paid leave time (such as accrued vacation time) while you are closed. However, you should know that you cannot require your exempt employees to use up accrued vacation time or other paid leave time during the week that you are closed, unless you provide them with “reasonable notice” of that requirement beforehand. Reasonable notice means that the notice must be given as far in advance as possible, and generally no less than either one fiscal quarter or 90 days before the closure, whichever is greater. Because Christmas is less than 90 days away, you won’t have enough time to provide “reasonable notice” of a weeklong Christmas week office closure. If you do decide to close for the week, your employees will therefore be entitled to decide whether they wish to utilize paid leave time during the closure.
- - - - - - - - - - - - - - - - - - - - - - - - - -
Back to Menu- Work Place Law 2006 Articles