Holiday Pay for Employees with Alternative Work Schedules [Wage & Hour FAQ]

by Franczek Radelet P.C.

FAQs17489126.jpgWith paydays that include the recent July 4th holiday coming up, it is a good time to address a fairly common question for employers whose employees work “alternative” workweek schedules: How should employers handle holidays? For instance, on an HR mailing listserv I participate on, an HR manager recently asked:

Q:        One of our departments works four days a week, 10 hours a day. When they submit vacation or sick time, the request is for 10 hours. But how should holidays be handled? Should they get paid 10 hour holidays or 8 hours like the rest of the employees?

Before we get to the answer, let’s make sure we have the same things in mind about “alternative” schedules. Typically, employers implement two types of alternative work schedules, which I’ll generally refer to as “compressed” and “flexible.” A compressed schedule involves working longer but fewer days each week, so that employees complete a full 40-hour week (or 80-hour biweekly periods) in fewer than 5 or 10 work days. Forbes Magazine published an article last year just before Labor Day extolling the virtues of the 4-day workweek, but there are several ways you can create a compressed schedule. The key feature is that a compressed schedule is fixed; there’s no flexibility about when employees report to and depart work each day. The two most common compressed schedules in my experience are:

  • The “5/4/9” schedule in which employees work 8 9-hour days and 1 8-hour day in the pay period and get an extra day off every other week.
  • The “4-10” schedule in which employees work 4 10-hour days each week of the pay period and have an extra day off each week.

Regardless, employees with a compressed schedule work a total of 80 hours during each biweekly pay period.

As the name implies, flexible schedules are, well, flexible! We’re not talking complete flexibility here; employees typically can’t can come and go at any time. Most flexible schedules have two things in common: a set of core hours when all employees are expected to be at work and flexible time bands that allow employees to vary the hours when they arrive and depart. To give you an example, attorneys at the Social Security Administration’s Office of the General Counsel, my former employer, had to work at least 40 hours each week, but we had flexibility on when we arrived and departed. Attorneys had to report no later than 9:00 a.m. and could leave no earlier than 2:30 p.m. (our “core hours”) but could otherwise work 8 hours anytime between 6 a.m. and 6 p.m. (our “flexible bands”). Want to take a three hour lunch? No problem. Need to leave early for an appointment or come in later so you could get the kids to school? No worries.

So, with these general definitions in mind, how do we handle holidays for workers with a 4-10 schedule?

Insights for Employers on Holiday Pay for Alternative Work Schedules 

The answer here is mostly one of policy, not law. No federal or state law currently requires you to provide any paid holiday benefit to employees. State law will typically provide only some broad boundaries about consecutive days worked, disclosure of policies to employees and forfeiture/accrual of leave. Defining if and how you will award that benefit is first and foremost up to you. So, the place to start is with your own policies and practices:

  1. What is your current practice, if you have one?
  2. What does your policy on holidays/holiday pay say about this situation, if anything?
  3. What does your policy say about whether holidays count as “hours worked”?

One way that I have seen employers address this situation is to treat workers on a compressed schedule differently than those on a flexible schedule, an example being the federal Department of Commerce’s Alternative Work Schedule policy. At Commerce, if a holiday falls on a 9-hour day for a compressed schedule employee, then the employee receives the full 9 hours of paid leave. An excused absence (whether paid or unpaid) for holidays will equal the number of hours the employee was scheduled to work. However, the Department’s application of the same situation to a flexible schedule employee differs. If a holiday falls on a day when the flexible schedule employee would have worked more than 8 hours, the employee only receives 8 hours of paid leave for the holiday. The time missed above 8 hours has to be made up somehow; if not with accrued leave, then as unpaid leave.

I don’t like this approach. It is not equitable, particularly when you have different groups of employees working different schedules. In the example above, the flexible schedule worker replaces 9 hours of work with 8 hours of leave, leaving them short, while the compressed schedule worker replaces 9 hours of work with 9 hours of leave. Multiply that by the number of federal holidays and administrative closure days (like the day after Thanksgiving) and that seems like a recipe for conflict and discontent among your employees.

Fixing that potential morale issue is relatively easy: adopt the same rule for all alternative work schedules. When a paid holiday falls on an employee’s regularly scheduled workday, pay the employee 8 hours of holiday pay (or the prorated amount if the employee works less than full time). If that regularly scheduled workday is greater than 8 hours, give your employee the option to:

  • elect to use either vacation/PTO to make up for the time in excess of the 8 hours that the employee was scheduled to work; or
  • elect to forego compensation for the difference; or
  • if possible and if you approve in advance, let the employee work the additional hours during the same workweek as the holiday, in lieu of using accrued leave.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Franczek Radelet P.C. | Attorney Advertising

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Franczek Radelet P.C.

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