From the Hotline: Holiday Pay During Introductory Period

Question: Our policy is to not provide holiday pay to employees during their introductory period. Is it permissible to apply this policy to exempt employees?

Answer: While the policy may be applied to nonexempt employees, this action cannot be applied to business closures due to holiday for exempt employees. An exempt employee will not be considered to be on a “salary basis” if deductions from his or her predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business, such as a holiday closure. If an employee is ready, willing, and able to work, deductions may not be made for time when work is not available. Because the company holiday is an “absence occasioned by the employer,” and the employer has no way of knowing whether an employee would be “ready, willing, and able to work” on that day, reducing an employee’s pay for the holiday may likely be found to be in violation of the salary basis test.