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How does pay work for the holidays? Am I required to pay employees for days they don't actually work?

Per state law, Indiana does not require that employers provide employees with time off on holidays or with premium pay for hours worked on holidays. If you decide to close your hours of operation, as long as you’ve informed the employees prior to them reporting to work on the holiday, no pay is required. Of course, your employees can choose to use accrued vacation or PTO to cover these missing hours. 


As one benefit to workers, many places of business opt to pay their non-exempt employees for specific days closed. According to a survey done by Human Resource Management Group, the vast majority (97%) of responding employers provide paid holidays in some form to their employees. Although it is personal choice, most employers consider accommodating requests to observe religious holidays.


Having this practice well documented in your employee handbook is highly recommended, including any policy discretion required such as the shifting of the days of the recognized holiday so as to decrease the amount of vacation, PTO, or off time employees may have as downtime during a holiday closure. Just make sure to be consistent with your holiday policy. Lastly, it’s important to note that if paid holiday time is provided, it is not required to add the unworked time toward regular hours when calculating overtime.


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