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Happy Holiday Pay? Part 1, Unwrapping the Requirements

With the holiday season quickly approaching, many employees will be taking time off of work. Perhaps you already offer your employees paid time off but aren’t sure if you are competitive. Or maybe you are thinking of hiring for the first time and are wondering what is legally required. This post provides the basics on paid time off for Colorado employers and explores what employees these days are likely to expect in terms of holiday and paid time off packages.

Paid Time Off in the U.S. is Generally Not Legally Required

As a general matter, the U.S. does not require businesses to provide paid time off to employees. The Fair Labor Standards Act (FLSA), which is the main federal wage and hour law, only requires that workers be paid a certain amount for the time they are actually working. It does not require paid holidays, vacation, sick leave, or other paid time off. This is true even for official federal holidays—even though the post office may be closed on Thanksgiving, the federal government does not require a business to observe the same practice (or to pay its employees even if it decides to close the office).

In addition, while it may be customary in certain industries for employees who work on federal holidays to be paid time and a half, it is not legally required. However, if an employer agrees to this practice in some sort of policy or employee contract, it will need to follow it.

Federal law does have something to say about unpaid leave. The Family and Medical Leave Act (FMLA) is a federal law that requires some employers to provide employees time off for certain qualifying events, like having a baby or when they have a serious medical condition. But this leave does not have to be paid. And most small businesses will not have to provide employees with FMLA leave: the law typically only applies to employers with 50 or more employees.1

So, for the most part, whether a business offers paid time off in some form has mostly been left to state law and the individual employer’s own policy.

Paid Time Off Rules in Colorado are Similar to Federal Law

Colorado’s law is similar to federal law in that it does not require paid time off. Like the FLSA, the Colorado Wage Act is not concerned with the time when an employee is not actually working. But most employers in Colorado provide some level of paid time off.

The few exceptions apply to very specific situations. For example, Colorado requires employers to provide a version of paid time off when their employees have to report for jury duty. But the law only requires pay for the first three days, and then up to $50 per day maximum. For an employee who works a standard 8-hour day, this amount is not even minimum wage. So, employers often agree to simply pay the employee’s normal wage for the first three days of jury duty, rather than dealing with the payroll headache. Here is a letter explaining some of the nuances.

In a future post, we’ll explore pitfalls to avoid when crafting a vacation/time-off policy.

Conclusion: What is Standard?

While offering paid time off for employees is not legally required in Colorado, the majority of employers provide it in some form. Countless articles have been written about the intangible benefits of time away from work in terms of productivity and employee morale. And with record low unemployment rates, more than ever, Colorado businesses need to offer competitive salaries and benefits in order to attract quality workers. Small businesses should carefully balance what they can afford to offer with what is needed to attract and keep workers in their specific industry.

While there is no “standard” vacation policy, here are some of the national averages.

Many employers offer paid holidays largely tracking the major federal holidays:

  • New Year’s Day
  • Memorial Day
  • Independence Day
  • Labor Day
  • Thanksgiving
  • Christmas

Technically, there are four more federal holidays (Martin Luther King Jr.’s Birthday, Presidents’ Day, Columbus Day, and Veterans Day), but these are less common in the private sector. Some employers offer floating holidays to allow employees to take off for other religious holidays or special days like their birthday.

Employers may also offer vacation, sick leave, or other paid time off. The federal Bureau of Labor Statistics tracks this nationally, and on average, employees with at least one year of service get 10 paid vacation days each year (which is typically separate from paid holidays or sick leave). The amount of time off an employee receives typically increases relative to years of service with a company. Check out more statistics here.

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1 Check out the Department of Labor’s Employer Guide to the FMLA for more information: https://www.dol.gov/whd/fmla/employerguide.pdf.
Featured Image: "Unnamed" by Danny Kekspro on Unsplash.
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