Exempt Holiday Pay

Our company has 6-paid holidays a year. However, because of our industry we are required to work most of them with the option of being paid for them on top of the hours worked or hold the day and take it at another time (non-exempt employees).

My question is this – if an exempt employee works on the holiday:

1. Do we have to pay them on top of their normal salary and/or

2. Do we have to let them hold it and take it at another time under PTO

There are no Federal Laws requiring paid holidays (that I am aware of), but I'm not even going to begin to answer this from a legal standpoint. I'm going to answer this from a business perspective.

Your questions both start out with "Do we have to..." I added the emphasis because I want to point out what you are implying: We want to give our employees only what is required by law.

This is a recipe for failure. Employees can sense when their employers resent having to pay them. Remember, that without your employees you don't have a job either.

I think either offering them extra pay or adding that time to their PTO bank is fine. You may run into problems with extra pay in that somebody will claim that violates the rules of exemption. I don't think it does. Companies are allowed to give bonuses to exempt employees, and this would be a holiday bonus. That said, my preference would be for the PTO, but I'm a fan of days off. Overworked employees don't perform as well.

So, yes, you should offer your exempt employees compensation for working on a holiday. You want them to feel like you value them. You want them to be happy to be working on the holiday, not feeling jerked around. Treat your good employees well and you'll have plenty of good employees. Treat them poorly and you'll eventually only have poor employees.