FEDERAL OVERTIME LAWS: HOLIDAY & VACATION PAY
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This provision deals with the type of absences which are infrequent, sporadic or unpredictable. It has no relation to "regular absences" such as lunch periods nor to regularly scheduled days of rest. Sundays may not be workdays in a particular plant, but this does not make them either "holidays" or "vacations," or days on which the employee is absent because of failure to provide sufficient work. The term refers to those days customarily observed in the community in celebration of some historical or religious occasion; it does not refer to days of rest given to employees in lieu of or as an addition to compensation for working on other days.
The term "other similar cause" refers to payments made for periods of absence due to factors like holidays, vacations, sickness and failure of the employer to provide work. Examples of "similar causes" are absences due to jury duty, attending the funeral of a family member or inability to reach the workplace because of weather conditions. Only absences of a nonroutine character which are infrequent or sporadic or unpredictable are included in the "other similar cause" category.
The computation of overtime pay in holiday workweeks is governed by these rules:
(1) So-called "idle" holiday and vacation pay—money an employee receives whether he works or not—need not be included in figuring the regular rate. It may not, however, be offset against overtime pay due under the Act;
(3) Premium payments of at least an extra half-time which an employee receives for time worked on the holiday may be excluded in figuring the regular rate and may be offset against overtime pay due under the Act;
Example (1): An employee whose rate of pay is $5 per hour and who usually works a 6-day, 48-hour week is entitled, under an employment contract, to a week's paid vacation in the amount of the usual straight time earnings ($5 × 48 = $240). The employee foregoes a vacation and works 50 hours during that week. The statutory workweek is 40 hours.
$240.00 = Vacation pay
$250.00 = Regular pay ($5 regular rate × 50 hours worked)
$515.00 = Total Compensation Due
The regular rate of $5 per hour is not increased by adding the $240 vacation pay into its computation, and no part of the $240 may be used to offset the statutory overtime compensation which is due. There is no statutory right to the $240 vacation pay or any other sum as vacation pay. This is a matter of private contract.
Example (2): The same employee in Example (1) above is entitled under a contract to 8 hours of pay at a regular rate of $5 per hour for the Christmas holiday. The employee foregoes the holiday and works 9 hours on that day. During the entire week the employee works 50 hours.
$ 40.00 = Idle holiday pay ($5 × 8 hours)
$250.00 = Regular pay ($5 × 50 hours worked)
$ 25.00 = Overtime pay ((½ × $5) × 10 overtime hours)
$315.00 = Total compensation due
The regular rate of $5 was not increased by adding the $40 holiday pay to the computation. No part of the $40 may be used to offset the statutory overtime compensation due.
[If the employment lawyers are not entitled to holiday or vacation pay when they work on those days, then the premium pay received for work on those days is excludable from the regular rate and credited towards overtime pay
$250.00 = Regular pay (50 hours × $5)
$ 25.00 = Overtime pay (10 hours × (½ × $5))
$ 22.50 = Holiday premium (9 hours × ($7.50−$5))
The employer is able to take credit for the holiday premium against the overtime premium and the employee is only due $2.50 for overtime ($25 overtime − $22.50 holiday premium). The straight time vacation pay ($9 hours × $5 = $45) is not included in the regular rate or credited against the overtime premium. Thus, the employee is paid as follows:
$ 22.50 = Holiday premium
The statute does not require premium pay for a holiday. Since the holiday premium is one and one-half times the established rate for nonholiday work, it does not increase the regular rate because it qualifies as an overtime premium under Section 7(e)(6), and the employer may credit it toward the statutory overtime compensation due.
Example (4): Same employee as in the above examples, except that the contract calls for $10 (double time) for each hour worked on the holiday.
$250.00 = Regular pay ($5 × 50 hours worked)
$ 25.00 = Overtime pay (10 hours × (½ × $5))
$45.00 = Holiday premium (9 hours × ($10−$5))
The employer is able to take credit for the holiday premium against the overtime pay, so no additional overtime is due ($45 premium > $25 overtime). Thus, the employee is paid as follows:
$205.00 = Regular pay ($5 × 41 nonholiday hours)
$ 90.00 = Holiday pay (9 hours × $10)
$295.00 = Total Compensation Due
Since this holiday premium qualifies under Section 7(e)(6), it is excludable from the computation of the regular rate and may offset against overtime compensation due.
In distinguishing Examples (3) and (4) from Examples (1) and (2), it should be noted that the correct provisions in Examples (1) and (2) called for holiday pay whether the employee worked or not. In Examples (1) and (2), the employee received some pay attributable to the holiday, whether he or she worked or not, and some pay at a nonholiday rate for hours worked on the holiday. In Examples (3) and (4), all the premium pay the employee received for working on the holiday (even though it is double time) was directly attributable to work performed on the holiday.The payment of an additional hour's pay to employees who work a seven-hour shift at the beginning of the change to daylight savings time is treated as a holiday hour and need not be counted as part of the regular rate of pay for overtime purposes. This amount, however, cannot be credited toward any overtime compensation due for the week. But at the end of the daylight savings period, employees working the nine-hour shift are entitled to overtime on the basis of all hours worked in the workweek, including the extra hour worked during the time change
