Question: Now that the holiday season is upon us I plan to keep my coffee shop open on Thanksgiving, Christmas Day, and New Year’s Day.  Am I required to pay my hourly employees overtime if they work on any of these holidays?  Also, if I decide to close on these holidays, do I have to pay my employees for their regularly scheduled hours not worked during the holiday?

Answer: No.  Absent a collective bargaining agreement or other employment agreement to the contrary, California law does not require employers to close on holidays or pay premium wages for hours worked on a holiday.  Hours worked on a holiday are paid at the employee’s regular hourly rate unless the employee works over eight hours on the holiday or works more than 40 hours in the applicable workweek.  If an employer closes in observance of a holiday, the employer is not required to pay its hourly non-exempt employees holiday pay for hours not worked on the holiday.  However, if you employ exempt salaried employees, you cannot pro-rate their salary based on the holidays not worked due to business closure.

Although California law does not require employers to pay holiday pay for non-overtime hours worked on a holiday, employers desiring to pay a premium to employees who work on an observed holiday or to pay employees when the business is closed in observance of a holiday may do so.  Such employers should implement a clear written policy and distribute it to all employees so that employees are not confused about compensation for work performed or not performed on a holiday.  The policy should include the following information:

  • A list of the holidays you will observe;
  • Whether the business is closed on an observed holiday;
  • A definition of which employees are eligible for holiday pay (e.g., full-time and/or part-time employees);
  • Whether employees working on an observed holiday will be compensated at a premium rate; and
  • That holiday time paid for non-working hours is not counted as hours worked for purposes of determining overtime.

If you intend to remain open for the upcoming holidays and your employees are paid the minimum wage, be sure you pay the correct minimum wage for any regular hours worked on New Year’s Day 2020.  The minimum wage for 2019 is $11.00 an hour if you have 25 or fewer employees and $12.00 an hour if you have 26 or more employees.  On January 1, 2020 the minimum wage will increase to $12.00 an hour if you have 25 or fewer employees and $13.00 an hour if you have 26 or more employees.  Therefore, make sure that you pay the correct minimum wage rate for New Year’s Day if you will be staying open for the holiday.

Also remember that you may be required to pay a higher minimum wage if your city or county has adopted a higher minimum wage than California.  If so, you must pay the higher minimum wage rate if you employ individuals in a city or county that has a minimum wage ordinance.  If you’re unsure if the city or county in which you have employees is subject to a higher minimum wage than California, you should contact your employment law attorney or human resources professional.