HR Management & Compliance

Do We Have to Pay for Unused Floating Holidays?

In addition to paid
vacation days and paid holidays, our company offers employees one floating
holiday each year, to be taken on the employee’s birthday, anniversary date, or
other day of the employee’s choosing. One of our employees just gave us two
weeks’ notice and asked whether his final paycheck will include the wages for
the floating holiday, which he never took this year. I know the law requires us
to pay out accrued vacation when an employee terminates. Do we have to do the
same for this floating holiday?

– Jeff in San Jose


The HR Management & Compliance Report: How To Comply with California Wage & Hour Law, explains everything you need to know to stay in compliance with the state’s complex and ever-changing rules, laws, and regulations in this area. Coverage on bonuses, meal and rest breaks, overtime, alternative workweeks, final paychecks, and more.


The Division of Labor
Standards Enforcement (DLSE), which is the labor commissioner’s enforcement
arm, has issued an opinion letter about floating holidays. The opinion addressed
an employer policy that gave employees two floating holidays per year for
employees to observe their birthday and anniversary on days the employee
selected. The policy further stated that an employee was eligible for this
floating holiday pay provided he or she worked both the day before and the day
after the holiday.


The employer asked the DLSE
if it was obligated to pay out a floating holiday at termination if the employee
had worked the day before and the day after his or her anniversary and/or
birthday but didn’t take the actual day off. The DLSE opined that the holiday
here was just like vacation because it was not tied to a specific date.
Further, the employee met the conditions for earning the holiday pay (i.e.,
working the day before and after), and thus was entitled to pay for the unused
day on termination. The DLSE noted that had the employer limited the floating
holiday to the actual date of the employee’s birthday or anniversary, the
holiday would not be considered vacation.


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