If We Offer Hourly Employees a Paid Holiday on Monday, Do I Need to Pay Overtime to Employees if They Work Extra Hours Tuesday-Friday?
By Kevin M. Mosher • Apr 1, 2014
No, not under federal law unless they actually “work” more than 40 hours per week (48 for MN employers if your company is not covered by federal law – most employers in MN are covered by federal law though).
It’s a common mistake companies make believing that paid time off (PTO) – e.g. paid vacations or holidays – count the same toward overtime as actual work when calculating overtime pay. They don’t. Under federal law non-exempt employees are entitled primarily to two things – (1) pay of at least minimum wage for each hour worked, and (2) 1.5x their regular rate of pay for all hours “worked” over 40 in a workweek. PTO is not “work,” so paid holidays or vacation days don’t count toward this 40 hour threshold.
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