A floating holiday is an employee benefit that employers provide for employees. No government laws, in the US, such as the Fair Labor Standards Act (FLSA), require an employer to provide a floating holiday for employees. But, there are reasons related to diversity, work-life balance, and employee satisfaction why an employer might consider a floating holiday when setting a paid holiday schedule.
The typical paid holiday schedule in the US includes both civic, religious and traditional days that a majority of the population celebrates. A paid floating holiday, or two, allows employees to take paid time off when their practices don't match the typical work schedule. A floating holiday allows an employee to take any day off, for any reason, as he or she needs the day.
For example, a Jewish employee might like to use two floating holidays for Yom Kippur, Rosh Hashanah, Hanukkah, or Passover. Without a floating holiday, the practicing Jewish employee would need to take vacation or PTO to celebrate or remember on these special days. Employers honor the needs of diverse employees when they offer a floating holiday or two.
Even employees who celebrate the usual list of paid holidays might enjoy using a floating holiday for their birthday. Other employees will use a floating holiday for an annual event such as a family reunion, a child or spouse's birthday, a holiday shopping day, or a parent-teacher day.
Needed Policy Decisions for a Floating Holiday
Employers who consider offering a floating holiday need to make policies relative to how the day may be scheduled and taken. They also need to determine whether the floating holiday can carry over into a new calendar year. If you share these decisions when the floating holiday is announced, employees will not experience confusion which can lower the positive impact of a new benefit.
These are the decisions about a floating holiday that the employer needs to make.
- When may the employee take the floating holiday? If no time period is specified, the employee may take the paid day off at any time. If the floating holiday may be taken at any time, managers need to understand that they must work with their employees to allow the employees to take the floating holiday as they need it.
- Like PTO and paid vacations, floating holidays are considered to be wages earned. As such, when an employee leaves the company, his or her unused floating holiday must be paid out. As a result, employers may want to consider that the time for a floating holiday is accrued. Or, in the case of two paid days off, an employee might earn one in each six month period of time. The policy should specify.
- The employer needs to decide whether the employees can carry over an unused floating holiday into the next calendar year. I do not recommend that you allow employees to carry over the floating holiday. Either pay them for the time not taken at the end of the year or write your policy to state that no more floating holiday time may be accrued until the time off already accrued is taken.
- Track employee accrual and use of a floating holiday just as you would deal with PTO, paid vacation time, or any other paid time off benefit. Remember to include this time when paying an employee who leaves the company.
- Do not consider a use it or lose it policy which is illegal in some states. Your goal with a floating holiday is to extend a benefit to employees that they need and want. Taking the floating holiday away is not true to the spirit or goals of your provision. Why cause needless employee grumbling? Always consider the consequences.
Blackout time periods during the calendar year, during which employees cannot take their floating holiday, are a mistake for the same reason. The typical blackouts are the time periods when an employee is most likely to want to take his or her floating holiday - especially during the long November-December holiday season.
A floating holiday is another way that employers can relatively inexpensively enhance their employee benefits package. It is appreciated by employees and it is a morale booster – implemented correctly with a clear policy in place. Otherwise, you risk grumble, grumble, grumble.
See a typical paid holiday schedule for the private sector and the public sector.