Should Your Company Offer a Floating Holiday?

Young woman with surfboard on beach
••• Felix Hug/ Taxi/ Getty Images

A floating holiday is a benefit that employers may opt to provide to employees. This coveted benefit is a paid day off that's not tied to the typical paid holiday schedule for the public and private sectors. The floating holiday provides your employees with another opportunity for flexibility, which is prized by workers of all stripes.

No U.S. laws, such as the Fair Labor Standards Act, require employers to provide floating holidays. But there are reasons related to diversity, work-life balance, and employee satisfaction for why you 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 so much.

The typically expected paid holidays in the U.S. include civic, religious, and traditional days that a majority of the population celebrates. A floating holiday or two allows employees to take paid time off when their practices don't match the standard holiday schedule or for any reason that they need 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, he would need to take vacation or another type of PTO to celebrate these days. You honor the needs of diverse employees when you offer a floating holiday.

Even employees who celebrate the usual paid holidays might enjoy using a floating holiday to celebrate a birthday or another annual event such as a family reunion, holiday shopping day, or parent-teacher day.

Floating Holiday Considerations

If you're thinking about offering a floating holiday, you need to make policies relative to how and when the day may be taken. The way in which employees schedule a floating holiday with their managers 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.

Specific Decisions Regarding a Floating Holiday

If you share decisions when you announce the floating holiday, employees will be less likely to experience confusion, which can reduce the positive impact of the new benefit.

  • 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. In this instance, managers need to understand that they must work with their employees to allow them to take the floating holiday when they need it.
  • Like paid vacations, floating holidays are considered wages that the employee has earned. As such, you must pay the employee's floating holiday pay when he decides to leave the company. Thus you may want to consider that the time for a floating holiday is accrued or accumulated periodically. Or, in the case of two floating holidays, an employee might earn one every six months. The policy should specify all of these details.
  • You need to decide whether employees can carry over an unused floating holiday to the next calendar year, but note that this is generally not recommended. Either pay them for the time not taken at the end of the year or write the 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 floating holidays just as you track any other paid time off. Remember to include this time when paying an employee who leaves the company.
  • Don't consider adopting 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 it away is not true to the spirit or goals of your provision. Why cause needless employee grumbling? Always consider the consequences. Blackouts, during which employees cannot take their floating holidays, are a mistake for the same reason. They usually occur during the same 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.

    Think of a floating holiday as another way you can inexpensively punch up your company's employee benefits package. It's a morale booster that's appreciated by employees when implemented correctly with clear policies in place.