Kim's HR Potpourri » Kim's Korner » What You Need to Know About Floating Holidays
What You Need to Know About Floating Holidays
Floating holidays are a popular benefit with employees, but to avoid problems there are a few things you should know.
First, floating holidays are used at an employee’s discretion during the year. They are not tied to any specific event, such as hire anniversary dates or birthdays. In the absence of any specific policy, the employee is free to use it anytime.
Second, floating holidays are treated legally the same as vacation and paid-time-off (PTO), meaning they are considered part of wages earned. Therefore, upon leaving the company, unused floating holiday time must be paid out the same as unused vacation and PTO.
To avoid issues with floating holidays, clear policies should be put in place. For example:
Set up an accrual schedule. Rather than simply stating that an employee gets three floating holidays per calendar year, your policy can state that an employee accrues 1 floating holiday every 4 months. This avoids the situation where an employee leaves the company in January and must be paid for all three floating holidays, which would be the case if no accrual system was in place.
You can cap the accrual of floating holidays. A policy may state that an employee who doesn’t use his floating holidays in one year cannot accrue any more time the following year until he uses one or more days. Alternatively, you can pay out at year’s end any unused floating holiday time. Whatever you choose, make sure your policy spells it out. And under no circumstances implement a “use it or lose it” policy. This is not allowed in California.
If you want to implement blackout periods on floating holidays, such as during busy seasons, make sure your policy is clear. Use specific dates, and avoid vague phrases such as “at the manager’s discretion.” Keep it crystal clear.
Track floating holiday use just as you would track vacation time or PTO. And make sure, upon separation from the company, that unused floating holiday time is paid out to the employee. If you fail to do this, the employee can file a wage-and-hour claim and conceivably collect a “waiting penalty” of one full days wage for every day the wages were unpaid (up to 30 days). The employee has up to 4 years to file the claim. (If your company illegally implemented a use-it-or-lose it policy, the employee can file anytime: there is no statute of limitations in that case).
Floating holidays can be a great benefit to offer employees; just make sure you implement clear policies to avoid any confusion.
The preceding information pertains to California only, and is for general informational purposes only. It is not legal advice and is not intended as such. Human Resource professionals are strongly encouraged to check the laws and regulations of their home state and local cities.
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Filed under: Kim's Korner · Tags: California, Floating Holidays, Holidays, Paid time off
Great tips, thanks!
Thanks for reading and commenting!
Good post, even though it is for only the Left Coast. Great job.
Regarding, “First, floating holidays are used at an employee’s discretion during the year. They are not tied to any specific event, such as hire anniversary dates or birthdays. In the absence of any specific policy, the employee is free to use it anytime.”
Is this something that’s part of California or U.S. law? That is, is it written somewhere? I ask because a coworker of my wife is in a situation where the business they work for, according to their handbook, “observes 10 holidays per year,” two of which are “Floaters” (with “Yom Kippur” and “Rosh Hashanah” in parenthesis next to “floaters”). It then says, those who don’t observe these days have the time added to their vacation accrual.
So, the coworker wants to observe Rosh Hashanah, but they are telling her that she can’t use her “vacation time” because she hasn’t passed her 91st day of employment. But, their policy would seem to say that for those who want to observe those days, it’s a “holiday,” and for those that don’t, THEY get additional vacation time. I hope I’m not being confusing, I’m just annoyed for my wife’s coworker and want to give her the right thing to say.
Thanks for your consideration and for a great article.
I specialize in California human resources issues, and I’m assuming your wife’s friend works for a California company. California companies are not required by law to offer time off for holidays or personal holidays. But, if they do, they are free to develop their own policies, although there are some requirements about allowing accommodations for religious holidays. Also, if a company wants to enforce a 90-day waiting period upon hire, that is allowed.
What I find odd is the parenthetical reference to the two Jewish holidays in the company’s policy, as well as the conversion of floating holiday time to vacation time. Generally speaking, these two types of paid time off would not be mixed, as you run into problems with accrual, capping, and payout at termination issues. However, as I said, companies have a wide range of latitude in this area. What’s important in these matters is that a company’s policy should be clearly spelled out so that the issues your wife’s friend is experiencing don’t happen. Too often, employee handbooks are unclear or vague and confusion is the result. I think this is the case in your example. I’m sorry I can’t be more specific in my answer, but I would have to have the company’s complete employee handbook in front of me. (Please don’t send it to me; you will probably violate company confidentiality policy.)
My final recommendation would be for the friend to go to their company human resources officer, assuming there is one, and get a complete explanation of how the time-off policies are applied. I’m curious why the friend wants to use her vacation time instead of her holiday time. Does the 90-day waiting period apply to all time off or just certain types? If a holiday is religious in nature, California employers are required by law to provide reasonable accommodation. But again, it doesn’t have to be paid and companies have some latitude about defining “reasonable.”
I’ve included two links that reference California law on these issues.
Governor’s Office of Economic Development:
http://www.business.ca.gov/StartaBusiness/AdministeringEmployees/EmployeeBenefits.aspx
California Labor Codes:
http://www.leginfo.ca.gov/
Labor codes 200-243 contain the California law pertaining to vacation and other time off.
Hi, I just started working at a hospital in California. My start day was august 1st. I get three floating holidays and 15 vacation days. When am I allowed to start using my floating days? Does it mean I have three floating holidays until December 31st? And then again I’ll have three in the year starting Jan 1st?
Hi Jane:
Thanks for taking the time to write to me. The company’s policy has a lot to say about how you can use your floating holidays. In your case, are your floating holidays granted immediately or do you have to accrue them? Are your floating holidays and vacation accruals based on your hire date or on the calendar year starting January 1st? Most companies base accruals on hire dates, not starting on January 1st.
What’s important to remember is this: vacation days and floating holidays are part of your wages and cannot be summarily taken away. For example, upon termination the company owes you accrued vacation pay and floating holiday pay just as if you had earned those as wages. Check to see if there is a cap on accrual, because if there isn’t, then you should be able to rollover unused floating holidays from one year to the next. In your case, it sounds as if you have three floating holidays that you can use from August 1, 2011 to August 1, 2012. After that you will be granted three more. That’s the usual case, but as I say read your company policy carefully and determine just exactly how the use of your floating holidays is stipulated.
What about Florida and Minnesota labor codes?
There are differences, no doubt. My strongest area is in California human resource issues, since I work in that state. If you work in another state, I’d try to find an online resource such as the two I pointed out in my last answer. Don’t assume any two states have the same rules, especially when comparing how California does things. As John pointed out, we’re the “left coast” guys out here.
Where is it codified that companies with California employees cannot enforce a “use is or lose it” policy with regard to floating holidays?
Hello Revey,
I rely on the following, which is from the CalChamber website:
The way an employer’s policy defines personal days or floating holidays is critical to the issue of whether they are defined as vacation, and therefore whether unused days must be paid out at the end of the employment relationship:
Time off which is tied to a specific event, such as a birthday or employee anniversary date, is treated as a holiday; whereas time off which is not tied to a specific event (even if previous notification to the employer is required) must be treated the same as vacation time.
This means that a personal day or floating holiday an employee may take at any time for any reason must be treated as vacation which accrues and vests, and must be paid out at termination. A personal day or holiday that can only be taken upon the happening of a specific event need not be paid out at termination.
…and I also rely on this:
http://www.dir.ca.gov/dlse/dlsemanual/dlse_enfcmanual.pdf
DIVISION OF LABOR STANDARDS ENFORCEMENT
ENFORCEMENT POLICIES AND INTERPRETATIONS MANUAL
15.1.12 Confusion Of Vacation Pay With Other Leave Benefits. DLSE has been asked on numerous
occasions to give an opinion regarding the difference between vacation wages and other leave
benefits. The DLSE has always opined that leave time which is provided without condition is
presumed to be vacation no matter what name is given to the leave by the employer. Such an
enforcement policy insures that leave policies which are nothing more than vacation policies under
a different name are not instituted as subterfuges to defeat the provisions of Labor Code § 227.3
and the conclusions of the California Supreme Court in Suastez. Thus, there must be an objective
standard by which it can be established that the leave time is attributable to holidays, sick leave,
bereavement leave or other specified leave. Tying the right to take the time to a specific event or
chain of events such as allowing a vacation period for the Thanksgiving weekend would suffice to
satisfy the test. (See discussion of the test in O.L. 1992.04.27, 1986.10.28, 1986.11.04,
1987.01.14-1).
Thank you!
Great post!! I’m a new a HR Manager and the company I work for has a PTO policy that is in accordance with California law and have identified the 6 paid holidays in the year. When I read the handbook, it indicated that the company provides 3 floating holidays.
According to your 2nd paragraph you state that, “First, floating holidays are used at an employee’s discretion during the year. They are not tied to any specific event, such as hire anniversary dates or birthdays. In the absence of any specific policy, the employee is free to use it anytime.”
Well, here at this company (I wasn’t here at that time), they made the employees take Presidents Day and they’re making the employees take the day after Thanksgiving as “forced floating holidays”, but the employees are free to use the 3rd floating holiday when they’d like. If the employees were “required” to take those days off as floating holidays should they even be called floating holidays? Or should we just call them holidays?
The other thing I’d like to ask is if we are going to implement floating holidays, we can choose the method of how they accrue correct?
Again! Great post.
Thank you,
HRM in CA
Thank you for your kind words! Yes, you are correct on both counts. I would just call those two assigned days “company holidays,” which is what they actually are. And yes, the company can spell out how floating holidays are accrued. Just make sure to spell it all out in the handbook so there’s no confusion.
Brilliant!! Thank you so much for your response. It helped me a lot.