Earlier this week, on Martin Luther King, Jr. Day, many employees got the day off from work. It is, after all, one of the ten annual federal holidays. California state employees get additional holidays: Lincoln Day (February 12), Cesar Chavez Day (March 31), Admission Day (September 9), and Good Friday afternoon. And California considers every Sunday a "holiday" for purposes of transacting official business.

On holidays, many businesses, including manufacturers, distributors, stores, restaurants, gas stations, and movie theaters usually remain open . . . and require workers. These workers may or may not receive extra "holiday pay" for time worked—or not worked—on the holiday. Why is that? For California employers, work holidays can raise a sometimes confusing tangle of questions, such as:

Is holiday time off mandatory? 

In California (except for the arcane "one day's rest in seven" rule), there is no law requiring private employers to provide any specific days off work. Therefore, the law does not require employers to grant time off for any holidays at all. Of course, many employers either close for the day or permit at least some employees to enjoy the holiday time off, either paid or unpaid. But holiday benefits are granted either under a collective bargaining agreement or an employer policy, and not the law. Under the "one day's rest in seven" rule, employees are usually not supposed to work more than six days in a row. However, the law recognizes that sometimes seven or more consecutive days of work will be reasonably required. In that case, as long as over the course of a month an employee gets one day's rest in seven, then properly paid overtime is deemed to be sufficient compensation for the successive days of work.

Is pay required?

There is no California peculiarity here. Like the federal Fair Labor Standards Act, California does not mandate any special premium rate of pay for work performed on holidays. Nor is there any law requiring that non-exempt employees be paid for holidays that are not worked. Exempt employees, who are paid on a salary basis, may enjoy de facto pay for any holiday that falls in a workweek in which they do any work, unless (as rarely happens) the employee chooses not to work for personal reasons, and not because it is a holiday. However, for employee morale purposes, most private employers provide paid time off for specified holidays, at least for full-time employees. And some also provide a premium rate of pay for employees who work holidays. But again (like granting vacation or PTO), the rule is according to employer policy, or a CBA, and is not mandated by California statute.

How does holiday pay affect calculation of overtime? 

Because holiday pay for a day off is not pay for hours worked, it is not included in the regular rate calculation for purposes of overtime worked that week. However, if a non-exempt employee works on a holiday, then those hours may result in overtime being owed. In that case, the time worked on the holiday is included when calculating the premium rate of pay.

What if the regular payday falls on a holiday?

The Labor Commissioner tells us that when a payday falls on a holiday, an employer has the choice to either pay employees in advance, or on the first business day after the occurrence of the holiday.

Is unused holiday pay due when an employee terminates? 

Generally, no. But let's not forget the fairly common practice of employers granting "floating holidays." Floating holidays (sometimes called personal days) permit employees, with advance notice, to take off any day they choose, for any reason. In California, if use of the floating holiday is truly unrestricted and does not depend on the occurrence of any other event, then the floating holidays are treated the same as vacation, meaning that any unused floating holiday pay is due upon termination. However, holiday pay that is tied to the occurrence of a specific event (such as the employee's birthday, or the day after Thanksgiving, or any other future event) is not due upon termination. This is because the right to be paid for the floating holiday that is tied to the happening of a specific event does not spring into being until the event to which it is tied occurs.

Who determines which employees work on a holiday?

Again, there is no California statutory mandate here. Employers that require workers to work on holidays just have to be fair and non-discriminatory in the way they assign the work. In some workplaces, having to work a holiday is viewed as a negative, while in others (especially if working the holiday involves overtime or employer-granted premium pay), getting to work the holiday is viewed as a positive.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.