Back in July, I discussed ways to handle holiday pay for employees with alternative work schedules. Just before the Labor Day holiday weekend, a client and reader of the blog asked me an even more fundamental question: do we have to provide employees with time off for holidays, whether with or without pay, or pay employees overtime or other premiums if they work on a holiday? The answer, as it often is in wage and hour law, is “it depends.”

Employers are not just being tight fisted by asking these questions. This particular employer operates a utility that has no “holidays” because its clients expect service (and support) 24 hours a day, 365 days a year. As is often the case in this industry, service level agreements mean rebating customers for downtime. For businesses in this industry, Christmas Day downtime at 2 a.m. is no different than downtime on a random September weekday at 2 p.m. Holidays have also become significant business days for retailers, particularly in recent years, and some employers in the hospitality industry have  voluntarily adopted “floating” holidays (time off on other dates in the year) because their busiest times tend to be the holidays that many of us have off—though these floating holidays can often be more trouble than they are worth

As a matter of federal law, the answer to the two questions above is a relatively straightforward “No.” No federal law currently requires private employers to provide holidays to their employees on federally recognized holidays or on any other days. No federal law requires employers to pay non-exempt employees (whether hourly or salaried) for holidays on which they are not required to work. As we have explained in the past, this issue is a bit more complicated for exempt employees.

When an employee is required to work on a holiday, nothing in federal or state law requires employers to pay an extra premium for working on that holiday. Yes, even in California. As the Department of Industrial Relations’ Division of Labor Standards Enforcement explains, “hours worked on holidays, Saturdays, and Sundays are treated like hours worked on any other day of the week.” The only requirement in federal or state law is that employers must pay non-exempt employees the overtime premium required for work in excess of 40 hours in a workweek, and some state or local laws require a premium for work in excess of eight hours in a workday. Employers have the absolute right and discretion to pay workers (or not) for holidays and not to count holiday pay as “hours worked” for purposes of overtime calculations.

So why was the answer to my client, “it depends?” You have to check state and local laws! Let me give you one example. In New Hampshire, a state statute prevents any employee from working “in any mill or factory on any legal holiday” except to the extent it “is both absolutely necessary and can lawfully be performed on the Lord’s Day” (RSA 275:28). Even outside of mills and factories, state law might intrude on your holiday policies. New Hampshire enacted a statute in 2009 (RSA 115-A:29) that requires private employers to permit honorably discharged veterans of the United States armed forces to take the day off on Veterans Day, November 11, regardless of whether the employer recognizes the holiday. Unless otherwise required by law (such as with exempt employees), the day off can be without pay.

While most employers have the right and discretion to set holiday policies, remember that states and local governments increasingly adopt their own, often more stringent employment laws and regulations. Remember to check with employment counsel and against all of these sources of law before making a decision about holiday pay, or implementing any other employee policy.