Should Your Company Offer a Floating Holiday?

What Policies Must an Employer Consider in Offering a Floating Holiday?

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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 for why an employer might want to consider offering a floating holiday or two. It's rare to identify such an inexpensive, easy to implement benefit that employees appreciate a lot.

The floating holiday provides your employees with another opportunity for flexibility. Flexibility is valued, especially by millennial employees, more than you will ever know or imagine.

The typically expected 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, when 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.

How the employees are to schedule the floating holiday with their manager is also an issue as are the requirements of managers to honor these requests. (A solid policy would guarantee that the employee could use the time as needed, and not have to negotiate.)

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.

Specific Decisions Regarding the Floating Holiday

These are the decisions about a floating holiday that the employer needs to make. You need to announce them when you introduce the policy.

  • 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 employees can use the floating holiday 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 wages that the employee has earned. As such, you must pay out his or her floating holiday pay when the employee decides to leave the company. 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 all of these details.
  • 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 for the exact time periods during which 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 hearing grumble, grumble, grumble over an employer's should be much-appreciated efforts to enhance employee benefits.

    See an employer's typical paid holiday schedule for the private sector and the public sector.

    Related to the Holidays