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Paid Holidays for Small Businesses 101

Coming off of a long Memorial Day weekend has gotten me thinking about paid time off. Many of us enjoyed a Monday spent outside with family this past weekend instead of sitting in an office. In fact, summer is kind of marked by these holidays–Memorial Day being the kick off, Fourth of July standing as a somewhat half-way point, and Labor Day putting a cap on the summer season. These holidays are all the more enjoyable when they don’t include work, right?

Offering paid holidays, vacation time, and sick days is an employee benefit that actually ends up benefitting employers as well. Here’s a look at some of the basics.

What paid holidays am I required to give my employees?

The simple answer is none. There is no federal law requiring any sort of paid time off. In regard to paid time off, the United States Department of Labor states, “These benefits are matters of agreement between an employer and an employee (or the employee’s representative).”

That said, be sure to check your state requirements because certain states do have requirements for paid sick leave.

What paid holidays am I required to give my employees?

What holidays should I offer as paid time off?

Since you don’t have to give any sort of paid time off, this question is really the more important one.

Remember in Charles Dickens’ A Christmas Carol how Bob Cratchit had to ask for Christmas Day off, and he had his ear bitten off in response? You probably don’t want to be that kind of boss. Or visited by any ghosts for that matter.

In the United States there are a few big federal holidays that are generally given to employees as paid holidays. They are:

  • New Year’s Day
  • Memorial Day
  • Fourth of July
  • Labor Day
  • Thanksgiving Day
  • Christmas Day

In addition, according to the Society for Human Resource Management, about 76% of businesses will also close the day after Thanksgiving and 47% will close on Christmas Eve.

So, if you want to avoid having Scrooge moniker amongst your employees consider offering the above ‘big 6’ to your employees as paid holidays.

You don’t need to stop there, however. Just as there is no law defining how much paid time off needs to be given to employees, there is also no law mandating a limit on it. So, if you are looking to add a few more three day weekends to your company calendar, you can give out these paid holidays as well:

  • Martin Luther King, Jr. Day
  • Columbus Day
  • President’s Day
  • Veteran’s Day
  • Good Friday

The culture and location of your business may influence which days you choose to honor.

Certain states have holidays as well, such as Patriot’s Day in Massachusetts, Maine, Wisconsin, Connecticut, and North Dakota.

What about religious holidays?

Things get a little bit gray and murky when it comes to religious holidays. No, you are not required to close the business for the day and give all employees a paid holiday.

However, you can’t discriminate. This means, according to the, The United States Equal Employment Opportunity Commission, that you must, “…reasonably accommodate an employee’s religious beliefs or practices, unless doing so would cause more than a minimal burden on the operations of the employer’s business.”

Basically if an employee asks for a religious holiday off, you should accommodate that as long as it won’t make things too hard for the company.

Why are paid holidays beneficial to the employer?

Why are paid holidays beneficial to an employer?

I think we can all see how the employee benefits from a paid holiday, right? But, on the surface, from the employer’s perspective it seems more like a necessary evil than something actually beneficial. Or, as our friend Scrooge points out, a paid holiday is akin to “…picking a man’s pocket…”

But, that’s not the case. There are actually plenty of reasons for why bosses should offer paid holidays.

1. Paid holidays make the company more desirable to work for

As an employer you want to find top talent, which isn’t always easy. One way to do that is by making your company a desirable company to work for. You want to make your business somewhere where someone wants to be. Competitive benefits packages that include paid holidays are incredibly helpful with this.

2. Paid holidays increase employee morale

Do you know what’s worse than feeling burned out and like you don’t get a break? Feeling like you’re burned out without a break and watching all of your family and friends get a break. Employee morale can have serious impacts on a business–both negative and positive.

Build up your team by giving them the breaks they deserve for their own mental health, and it will in turn help the health of your business.

3. Paid holidays decrease the amount of employee turnover

The hiring and onboarding process is arduous and expensive. Once you have the employee-especially if he or she is a good one, you want to keep him or her there. Offering plenty of paid time off will help to accomplish this goal.

So, there you have it: what you have to do, what you should do, and why you should do it. Looking for more business advice? Contact us at Lumen Advisory and Finance!