Floating holidays are paid holidays you give to your employees, but they aren’t tied to specific dates like federal holidays are. Typically, employees can use floating holidays at their discretion. Think of them as supplemental to the paid days off you currently offer and as an additional perk in your small business benefits package.

Floating holidays can offer flexibility for your employees who celebrate holidays that aren’t federally recognized, such as those who practice Judaism or Islam and would love a day off for religious observance without having to use their vacation time. Floating holidays can also come in handy for unexpected events or emergencies if paid time off (PTO) has been exhausted.

Many employers that offer floating holidays allow them to be unrestricted and taken at any time, usually with notice required. However, employers can choose to restrict them to specific times, such as during the employee’s birthday month.

Am I required to offer floating holidays?

Nope, there are no laws that require employers to give their employees floating holidays. It’s simply something you can offer as a perk for employees and as a way to help provide more work-life balance.

Why should I offer floating holidays?

According to a 2015 survey by the Society of Human Resource Management (SHRM), only 42% of employers offer floating holidays.

Offering floating holidays as a part of your benefits package can both entice job candidates and help you retain employees by giving them additional flexibility.

What type of floating holiday policy should my company have?

Since there are no legal requirements to offer floating holidays, it’s up to you how many floating holidays to provide your employees. Companies that offer floating holidays give employees an average of two per year, according to a 2017 SHRM report.

To stay compliant with your state’s labor laws, it’s usually best to treat floating holidays like any other paid vacation time your business offers. However, since floating holiday offerings can vary so much from employer to employer, it’s important to have a written policy about floating holidays.

Here are some things to consider including in your floating holiday policy:

  • Who qualifies for floating holidays.
  • How many floating holidays each employee will receive per year.
  • Whether there are any restrictions or blackout periods on when they can be used. Be aware, though, that adding these limitations can diminish the benefits of offering floating holidays.
  • Whether floating holidays can carry over into the next calendar year. Some state laws ban “use it or lose it” vacation policies. If you don’t want floating holidays to carry over, it may be smart to pay out unused floating holidays or include in your policy that no new floating holidays will be accrued until existing ones are used.
  • How the employee should schedule the floating holiday. For example, does it need to be scheduled and approved in advance by the employee’s manager?
  • Whether the floating holidays can be cashed out or paid upon termination. Note that in some states like California, if floating holidays can be taken at any time and are essentially the same as vacation days, they are considered earned wages that must be paid out upon termination.

Before you finalize your floating holiday policy, consult with an HR expert in your state to get the scoop on what laws apply to you.

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