What You Need to Know About Holiday Pay, Bonuses and Overtime.

The holiday season is on its way, and many employers are asking themselves questions about holiday pay and bonuses. Is your company aware of the policies your company practices?

Company-Observed Holidays

Private employers are not obligated to ensure to non-exempt employees paid holidays. But, if your offices are closed on a holiday, your employees should receive their full pay, unless they don’t work a part of that work week.

  • Which Holidays Should You Observe?
    • Employers can pick which holidays they want to be paid holidays. There are laws that state a business can’t be open on a certain holiday, but an employer isn’t required to pay their employees on said holiday.
  • Religious Holidays
    • According to both Federal and some state laws, employers are usually expected to accommodate their employees religious beliefs and practices, unless doing so would induce difficulties on the business. Employers may need to provide time off for their employees.
  • Paid Holidays and Overtime
    • Whenever your non-exempt employee works more than 40 hours a week, under federal law, they must be paid overtime pay (1.5 times their regular pay). When deciding to pay your employee overtime, you do not need to count paid time off
  • Preventing Absences Around the Holidays
    • Many employees are absent the day before and after a holiday. In order to prevent this, or at least reduce absences, some companies have required their non-exempt employees to go to work both before and after the holiday in order to receive pay for the holiday

Holiday Pay

There are no federal laws or Ohio state laws that require employers to pay non-exempt employees special pay for working on a holiday, unless they would be working overtime. However some employers choose to give special pay as an incentive for their employees who work on a holiday.

Holidays That Fall on Payday

Some states require that a business pay their employees on the proceeding business day, if a holiday falls on payday. However, if there is no such requirement, the employer can pick whether they want to pay their employees the day before or after.


  • Considering Overtime
    • As you establish your employee’s pay rate, and overtime, you must consider non-discretionary bonuses. A non-discretionary bonus is a bonus your employees are aware of, and it used to motivate them to work efficiently or to stay with the company. Typically to receive this bonus, employees must meet a measurable goal or target.
    • There are also discretionary bonuses that you can give to your employees. These are bonuses that are not promised in advance and are not given as a reward for meeting a goal. End of the year bonuses are a good example of a discretionary bonus.
  • Considering Taxes
    • Bonuses can be subject to both federal and state taxes. If a bonus is up to, but not exceeding, 1 million dollars, it is subject to a 25% federal tax. For amounts over 1 million there is a higher percentage taxed. Note: there are other bonuses that are considered taxable by the IRS (cash, gift card, gift certificate)

Since the Holiday Season is almost here, be sure to review your company’s policies to make sure they comply with federal and state laws.

By | 2017-12-06T11:00:31+00:00 December 5th, 2017|Blog, Industry Insights, Policy and Regulation|0 Comments