Holiday Pay & Bonuses: Do’s and Don’ts

Use this tab to define the parameters that determine adp holiday pay how the holiday pay for this holiday code is awarded. Consider permitting voluntary shift swaps or offering flexible schedules. For federal taxes, when an employee receives $1 million or less in supplemental wages during 2019 and those wages are identified separately from regular wages, the flat withholding rate is 22 percent. This content is based on generally accepted HR practices, is advisory in nature, and does not constitute legal advice or other professional services. ADP does not warrant or guarantee the accuracy, reliability, and completeness of the content. Employers are encouraged to consult with legal counsel for advice regarding their organization’s compliance with applicable laws.

Select this check box to indicate that employees who are not assigned a union code are eligible for this holiday pay code. This report provides an accounting of specified holiday pay codes to which hours and/or dollars were attributed during the specified time period. Select Reassign Holiday Pay Assigned Overtime to Doubletime if you want the regular hours reassigned to overtime by holiday pay to be reassigned to doubletime.

Count hours worked accurately.

This portion of the field is optional unless you select to reassign hours to both overtime and doubletime. When you reassign hours to overtime and doubletime and the hours worked exceed the number you specify in this field, hours will start being paid at the doubletime rate. Select this option to enter a specified number of hours that will be paid for the holiday. When you select this option, you must enter the number of hours in the accompanying entry field. Select this check box to indicate that an employee is required to work on the scheduled day following the holiday date. Select this check box to indicate that an employee is required to work on the scheduled day prior to the holiday date.

What Are the Rules for Paying Employees on Federal Holidays?

This rate factor applies to the hours that are classified as overtime (as defined through the Work Policies module). Click to access the Holiday Pay page, where you can begin defining information for a holiday pay record. Select this check box to override the Called Off Pay Code option if an employee works on the holiday date.

Majority—Holiday hours worked during a shift are paid in their entirety, provided that more than 50 percent of the time worked falls from the start time to one minute before start time on the next day. If the shift in question spans two holidays that fall on consecutive days, the holiday date on which most of the hours fall determines the rules for pay. To date, the Department of Labor (DOL) hasn’t specifically addressed situations in which a company paid holiday falls during a time in which an employee is on FFCRA leave. Consider consulting legal counsel to help determine how to treat these types of situations.

• For example, in Rhode Island, unless the employer is exempt, nonexempt employees must be paid 1.5 times their regular rate of pay for any work performed on Labor Day or another covered holiday (or Sundays).
• If the nondiscretionary bonus is earned over a single workweek, the bonus is added to the employee’s regular earnings for that workweek when determining their regular rate of pay.
• Use the Union Codes tab to assign union codes to the selected holiday pay record.
• You must also indicate how many hours to pay at the overtime rate before the doubletime rate begins.
• Only one holiday program can be assigned per pay group, so each holiday program must contain all of the holidays that apply to the pay groups that use that holiday program.
• Select Reassign Hours to award holiday pay by reassigning hours worked to overtime and/or doubletime.

Below, we address these and other common questions about holiday pay and bonuses. Use the Union Codes tab to assign union codes to the selected holiday pay record. At least one union code must be selected if the Include Non-Union Employees check box is cleared (not selected) on the General tab.

Consider ways to reduce absenteeism around paid holidays.

Whether the time displays in military time or standard time depends on how your preferences are set up in the User Setup module (User Setup ~ User Information tab). The Called Off Pay Code field is only available if the Scheduling module is activated.

Q: If we remain open on a holiday, am I required to pay non-exempt employees a premium for working that day?

With the holiday season fast approaching, review your policies and practices to make sure you are paying employees in accordance with federal, state, and local rules. If two or more holiday pay records have the same date but different settings for Reassign to Overtime and Reassign to Doubletime, TimeSaver uses the setting on the Time Calc tab in System Setup. TimeSaver displays the reporting information for the selected holiday pay record. All—All holiday hours worked during a shift will be paid if any portion of the shift falls on the holiday date. If the shift in question spans two holidays that fall on consecutive days, the holiday date on which hours are first recorded determines the rules for pay. Make sure you understand the rules that apply to your business and clearly communicate, and consistently apply, your policy on holiday pay.

Holiday Pay & Bonuses: Do’s and Don’ts

Check your state (and local) law and consult legal counsel as necessary before using it. Use the Pay Groups tab to assign pay groups to the selected holiday pay record. Select to override a setting that substitutes minimum wage for codes that pay less than minimum wage. Select Reassign Hours to award holiday pay by reassigning hours worked to overtime and/or doubletime. Select Generate Pay Code if you want to award holiday pay through a pay code. You can then specify whether the pay code is for a specific amount or for the hours worked.

• For example, if your company has employees who work in two different countries, you may need to create separate holiday programs that include the national holidays for each country.
• When an employee receives over $1 million in supplemental wages, the withholding on the excess is 37 percent.
• To help you plan your 2023 holiday calendar, here are answers to frequently asked questions about holidays and holiday pay.
• Holiday pay can be awarded in the form of a pay code or by reassigning worked hours to overtime and/or doubletime.
• After that specified number of hours is reached, employees will be paid at their regular rate of pay.
• All—All holiday hours worked during a shift will be paid if any portion of the shift falls on the holiday date.
• You must also indicate how many hours to pay at the overtime rate before the doubletime rate begins.

As the year comes to a close, many employers will be facing the annual challenge of managing holiday pay, year-end bonuses, and leave. This year, the COVID-19 pandemic and recent rule changes may present some additional considerations for employers. To help you understand requirements and best practices related to these topics, here are some key points to keep in mind.

For example, in Rhode Island, unless the employer is exempt, nonexempt employees must be paid 1.5 times their regular rate of pay for any work performed on Labor Day or another covered holiday (or Sundays). Under federal law, there’s generally no requirement to pay non-exempt employees a premium for working on a holiday, unless working on the holiday triggers federal or state overtime obligations. When determining an employee’s regular rate of pay for the purposes of overtime, employers must include nondiscretionary bonuses.

For example, cash, a gift certificate, gift card, and similar items that can easily be exchanged for cash are typically considered taxable wages, regardless of the amount (see IRS Publication 15-B). However, if an employer gives a turkey, ham, or other item of nominal value for the holidays, it is generally not considered taxable income. You can optionally put a limit on how many hours are reassigned to overtime (or to doubletime).