Three-quarters of American workers surveyed say it’s very important employers provide paid vacation time (76%), paid sick time (74%), and paid holidays (74%).
There are numerous holidays that can be observed by businesses with paid time off. You ought to be aware of your options and how to construct your PTO policy before deciding which ones to observe.
There are numerous holidays celebrated in the US. Some are acknowledged at the state level, while others are at the federal level. Some are of a religious or political nature. However, it can be challenging for companies to decide which holidays they should honor by providing paid time off due to the sheer number of holidays observed by American workers.
Moreover, when deciding whether holidays should be paid days off, your business should consider a variety of issues, including which ones your employees actually desire off and how offering them would affect your bottom line.
Before we dive into this subject in detail, let's first take a look at the table of content:
Impact of Paid Holidays on Salaried Vs Hourly Workers
Different Types of Paid Holidays
Common Paid Holidays Provided by Small Businesses
Advantages of Offering Paid Holidays
Integrating Paid Holidays into PTO Policy
3 Best Approaches to Follow for Paid Holiday Incorporation
Let's Start!
Understanding Paid Holidays
Paid Holiday is a form of reward for employees since they receive standard pay from the business, even during days off such as Labor Day, Thanksgiving, or Christmas.
However, some employers might do so as compensation for their staff members' contributions to the business. Furthermore, details regarding paid holidays are often provided during the onboarding process.
A few paid holidays include state, national, and religious holidays that employers may choose to provide their workforce with.
Remember that there is no federal law requiring employers to provide paid holidays to their workforce because the Fair Labor Standards Act (FLSA) primarily regulates minimum wage and overtime compensation.
Note that paid holidays are distinct from sick days and vacation days in that they are taken in order to observe a particular holiday.
Impact of Paid Holidays on Salaried Vs Hourly Workers
As previously stated, FLSA does not mandate that employers provide paid holidays to their staff, it is irrelevant from a legal position whether these workers are hourly or salaried.
Furthermore, it is up to the employer to determine whether or not to grant their staff a day off on a specific holiday and whether this day will be compensated time off.
Holidays are not regarded as any different from a regular workday for hourly employees who are entitled to overtime pay and do not automatically qualify for overtime compensation.
Once again, it is up to companies to decide if they will pay more for work completed over the holidays. Although salaried employees are paid yearly, they are not guaranteed paid holidays or overtime pay.
Different Types of Paid Holidays
To establish the proper procedure in your firm, small business owners need to grasp the many different forms of paid holidays. Let’s take a look at different types of paid holidays:
Federal Holidays
All federal offices and financial institutions are mandated to be closed on particular days because these are recognized federal holidays.
Even while it is allowed for private sector enterprises to operate as usual on public holidays and employers are not required to provide paid time off, the federal government wishes that non-government businesses would recognize these days as well.
Each year, banks and government offices close their doors for the following federal holidays. Both commercial and public businesses consider many of them as paid holidays.
- New Year’s Day
- Martin Luther King Jr. Day
- Presidents Day (Washington’s Birthday)
- Memorial Day
- Independence Day (Fourth of July)
- Labor Day
- Columbus Day
- Thanksgiving
- Christmas Day
State Holidays
States also have the option to create additional holidays that local government organizations must observe in addition to the ten federally recognized holidays. Like federal holidays, they differ from state to state and are often not observed by the business sector.
According to the Employment Law Handbook, there are two exceptions to the rule: Massachusetts and Rhode Island, which require private enterprises to give employees the day off for a state-designated holiday.
Floating Holidays
Employees may use these additional paid days off in addition to paid holidays. They can be used for birthdays, special occasions, or religious holidays. Moreover, not every company offers floating holidays, but they can be a good way to avoid discussions over why one holiday is on the calendar while another is not.
Common Paid Holidays Provided by Small Businesses
The following is a list of typical paid holidays that small business owners in the US give to their staff members. Check out:
Christmas Day
The day Christians celebrate the birth of Jesus has evolved into much beyond a religious holiday for many due to Christianity's prominence in American culture.
Furthermore, it is usually observed on December 25 and focuses on trees, presents, and community. There are food and party celebrations as well as religious rituals.
Similar to Thanksgiving, it is a very well-liked paid holiday that 97 percent of civilian employees get the day off from work.
Christmas Eve
Christmas Eve and Christmas are frequently considered a pair of paid holidays for many of the same reasons as Thanksgiving and the day following. Of course, every year on December 24, it is Christmas Eve. It will fall on a Saturday in 2022.
New Year’s Day
The first day of the year, January 1, is New Year's Day. On this day, the great majority of American employees are paid a holiday. It's also a good thing because lots of people enjoy sleeping in and relaxing from the late-night New Year's Eve celebrations.
Memorial Day
The last Monday in May is Memorial Day in the United States. It will occur on May 30, the final day of the month, in 2022. Since most employees get the day off, many people will enjoy their typical three-day weekend.
Moreover, it's a custom that most anticipate continuing, whether the days are spent remembering the deceased or making much-needed travel plans (there aren't many U.S. holidays between January and May).
Labor Day
The first Monday in September is designated as Labor Day in our country. It will fall on Monday, September 5 in 2022. Labor Day is a holiday for American workers first observed by a labor union in New York City in the late 1800s.
Moreover, it should naturally be a day of rest and organization. Because of this, Labor Day is a paid holiday for 91% of federal servants.
Thanksgiving Day
One of the most celebrated holidays in America is Thanksgiving, which is observed every year on the fourth Thursday in November. People observe it because of tradition, but there is also a growing effort, similar to that for Indigenous Peoples Day, to connect the celebration with Native Americans' subjugation in the past.
Furthermore, it is so deeply ingrained that it is frequently regarded as the beginning of the U.S. "holiday season." Thanksgiving will be observed on November 24 in 2022.
Martin Luther King Jr. Day
MLK Day will fall on Monday, January 17, 2022. Making MLK Day a paid holiday might be a tremendous show of togetherness as we continue to boomerang around in the direction of a more equal society with current rallies for civil rights. There is no denying the enormous impact this man has had on our country.
Independence Day
Every year on July Fourth, we commemorate the end of the Revolutionary War and our nation's freedom from Great Britain. 92 percent of American workers receive this paid holiday from their employers so they may spend the day and night grilling and enjoying the customary fireworks displays.
Advantages of Offering Paid Holidays
Following we have listed some crucial advantages of offering paid holidays for your employees. Let’s learn:
Improved Work-Life Balance
Employees' life outside of work is improved when they receive paid holidays. Restricting ones life only towards work leads to stress. It is crucial to manage workplace stress. Therefore, paid holidays is an amazing way out for employees to take some time-off.
Additionally, their performance at work is improved when they are content and at ease outside of work. Therefore, giving staff paid holidays benefits the business.
Enhances Employees’ Loyalty and Commitment
Giving your employees a paid holiday is an effective approach to increase their loyalty and goodwill. Additionally, employee engagement is all about loyalty and commitment.
High Productivity
Employees who take more paid holidays are more productive, according to 72% of HR professionals. Even forced vacations provide much-needed resets for workers and help prevent burnout. Every year needs vacations, just as every work week requires a weekend.
Enhanced Well-being
What travel brings is something you simply cannot obtain when at home in comfort.
Seneca, a philosopher from ancient Rome, said that "travel and a change of environment bring new strength to the mind."
Paid holidays refresh the brains and spirits of employees, making them more well-rounded individuals with priceless views. Not to mention that your company's culture changes in a much better way for both employers and employees in each and every aspect.
Recruitment tool
Offering Paid Paid while employee onboarding stands out to prospects without a doubt. Offering to pay for employees' vacations proves that you appreciate the care about the work-life balance and about their personal lives. In simple words, the Paid holiday benefit shows that the business is concerned about the welfare of its employees.
Integrating Paid Holidays into PTO Policy
Small business owners typically can't afford to give their staff members a day off for every federal or state holiday, but they must provide some in order to attract talent and stay competitive.
Furthermore, it is crucial to develop a formal holiday PTO policy that takes into account both the needs of your employees and the financial status of your company.
1. Make a Financial Assessment
You must determine your budget before deciding which holidays to offer paid time off to your staff. You might be able to give them all ten federal holidays if your benefits budget is sufficient. It might be only the primary six if money is scarce.
It is important to determine if your company or corporation will still be able to make enough money if their employees don't show up on time. So, employers must ask themselves and evaluate such circumstances as well. The cash flow condition must be weighed against the effectiveness of hiring new employees.
2. Analyze the Opposition
Reducing turnover is crucial since it can be expensive to recruit new employees and keep them on board. Moreover, you must consider what your rivals are doing when creating a holiday paid time off policy. It could be challenging to attract and keep great personnel if you're not.
Before choosing which trips to offer, research what your rivals are doing. You should at the very least match them, but if you want an advantage, you could want to add an additional vacation to the mix.
3. Think about the Current Situation
You don't have to adhere to a rigid PTO policy over the holidays. The current social atmosphere can be addressed in a flexible and ever-evolving manner.
For instance, in reaction to the Black Lives Matter movement, some businesses decided to make Juneteenth a permanent paid business holiday starting in 2020.. For employees to vote, volunteer, or participate in protests, then some corporation also provides civic and volunteer time off.
4. Survey the Staff
It may be simple to choose a few of the most popular federal holidays and leave it at that, but asking your staff what they would prefer is a better course of action.
Giving employees a day off for Christmas may seem like a no-brainer, but if the majority of your team doesn't observe the holiday (for cultural or religious reasons, for instance), it will be a wasted day off.
Furthermore, it can be difficult to choose from the numerous deserving celebrations and holidays. As employers, you must also take the demands of the company into account.
If you don't ask, you'll never know whether your staff would rather be off on Columbus Day or Martin Luther King Jr. Day. For another instance, it can be challenging for workers to get the polls on Election Day; by making that a paid day off, you could foster loyalty and goodwill among the workforce.
5. Make the Decision to Remain Open
You cannot afford to close entirely just because you give paid time off for a holiday. A restaurant or bar may be open when businesses like offices and banks are closed in honor of Christmas.
Therefore, you must determine how many employees will need to work on the holiday and how much you will pay them before you officially declare it. If you announce Christmas to be an official holiday but still need staff that day, paying time-and-a-half or double time is a great way to create goodwill if your business can afford it.
3 Best Approaches to Follow for Paid Holiday Incorporation
Following we have discussed the three best approaches when it comes to paid holiday incorporation for HR's. Let’s check them:
1. Include Two Floating Holidays
An employee would then have nine paid holidays. They can select the two floating holiday alternatives (mostly from the second list) that make the most sense in light of their own beliefs, their family's vacation plans, and other considerations.
2. Work from Home
Make some of those holidays WFH (or WFH-optional) days so that staff members are expected to be online but are not required to report to work. Moreover, this is a decrease in the need for sitting time rather than actual work time.
3. Give the season some context
Yes, if you market kids' toys, the weeks leading up to Christmas may be extremely busy for you. It probably isn't as bad if you sell insurance. So, when creating your holiday itinerary, take in mind your hectic seasons.
Furthermore, there are other times of the year when your business will naturally slow down, which may result in a greater desire for family time. So, in that case when this happens, it's acceptable to let up a little and offer a few additional days if it will benefit your bottom line.
How Deskera Can Assist You?
Deskera People has the tools to help you manage your payroll, leaves, employee onboarding process, and managing employee expenses, all in a single system. Features like a flexible payment schedule, custom payroll components, detailed reports, customizable pay slips, scanning, uploading expenses, and creating new leave types make your work simple.
Final Takeaways
We've arrived at the last section of this guide. Let's have a look at some of the most important points to remember:
- Paid Holiday is a form of reward for employees since they receive standard pay from the business, even during days off such as Labor Day, Thanksgiving, or Christmas.
- Remember that there is no federal law requiring employers to provide paid holidays to their workforce because the Fair Labor Standards Act (FLSA) primarily regulates minimum wage and overtime compensation.
- Note that paid holidays are distinct from sick days and vacation days in that they are taken in order to observe a particular holiday.
- According to the Employment Law Handbook, there are two exceptions to the rule: Massachusetts and Rhode Island, which require private enterprises to give employees the day off for a state-designated holiday.
- Once again, it is up to companies to decide if they will pay more for work completed over the holidays. While salaried workers are paid annually, they are not entitled to overtime pay, and they are not assured paid holidays.
- All federal offices and financial institutions are mandated to be closed on particular days because these are recognized federal holidays.
- Each year, banks and government offices close their doors for the following federal holidays. Both commercial and public businesses consider many of them as paid holidays.
- States also have the option to create additional holidays that local government organizations must observe in addition to the ten federally recognized holidays. Like federal holidays, they differ from state to state and are often not observed by the business sector.
- Employees may use these additional paid days off in addition to paid holidays. They can be used for birthdays, special occasions, or religious holidays.
- Employees' life outside of work is improved when they receive paid holidays. Additionally, their performance at work is improved when they are content and at ease outside of work. Therefore, giving staff paid holidays benefits the business.
- Employees who take more paid holidays are more productive, according to 72% of HR professionals. Even forced vacations provide much-needed resets for workers and help prevent burnout.
- It is crucial to develop a formal holiday PTO policy that takes into account both the needs of your employees and the financial status of your company.
- You must determine your budget before deciding which holidays to offer paid time off to your staff. You might be able to give them all ten federal holidays if your benefits budget is sufficient. It might be only the primary six if money is scarce.
- Reducing turnover is crucial since it can be expensive to recruit new employees and keep them on board. You must consider what your rivals are doing when creating a holiday paid time off policy. It could be challenging to attract and keep great personnel if you're not.
- It may be simple to choose a few of the most popular federal holidays and leave it at that, but asking your staff what they would prefer is a better course of action. Giving employees a day off for Christmas may seem like a no-brainer, but if the majority of your team doesn't observe the holiday (for cultural or religious reasons, for instance), it will be a wasted day off.
- Determine how many employees will need to work on the holiday and how much you will pay them before you officially declare it. If your company can afford it, paying time-and-a-half or double time is a terrific approach to foster goodwill if you declare Christmas to be an official holiday but still need personnel that day.
- Make some of those holidays WFH (or WFH-optional) days so that staff members are expected to be online but are not required to report to work.
- There are other times of the year when your business will naturally slow down, which may result in a greater desire for family time. When this happens, it's acceptable to let up a little and offer a few additional days if it will benefit your bottom line.
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