HR Hotline: How Do We Calculate Overtime Pay During a Holiday Pay Period?
Q: Our company provides a certain number of paid holidays to our employees. With the upcoming holiday, many of our employees are asking whether they’ll receive overtime pay if their work hours plus paid holiday hours exceed 40. Can you clarify this issue?
A: In Connecticut, holiday hours are not considered “working hours,” and so should not be counted as part of the 40-hour regular work week.
For example, suppose an hourly, non-exempt employee receives eight hours of holiday pay for July 4. The employee works 32 hours over the course of the other four weekdays. The employer also asks them to work six hours on Saturday.
The employer should compensate the employee for 38 hours of work, and eight hours of holiday, both at the employee’s “regular rate.” No overtime pay is due.
As most employers know, employees who work more than 40 hours in a work week must be paid at one and a half times the worker’s “regular rate.”
The regular rate, however, does not include payments made for “occasional periods when no work is performed due to vacation, holiday, illness, or failure of the employer to provide sufficient work.”
Employers should also be aware of the meaning of the term “hours worked.” Employees must be paid for the following:
- All time during which a worker is required to be on the employer’s premises, or at a prescribed workplace, or to be on duty
- All time during which an employee is “permitted” to work (such as answering emails or phone calls from home)
- Time during which an employee is required to be on call for emergency service at a location designated by the employer
If an employee receives holiday pay and performs no work during those holiday hours, the employer need not count those hours toward the 40-hour maximum at the regular rate.
Employers should emphasize to their non-exempt employees that holiday pay is just that—compensation to be on holiday, not working.
An employer who allows employees to perform work over the holiday, whether remotely or by being on call for example, must pay those employees for time worked, and must include those hours in the 40 hour total, thus increasing the chances of paying overtime.
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