Should Holidays Count Towards Company Leave Policies?

Managing employee leave, especially parental leave, often raises questions about holidays. One of the most common concerns we hear during customer onboarding is whether holidays should count toward an employee’s leave entitlement—or be excluded entirely.

The answer isn’t always straightforward. It depends on factors like the type of leave, applicable legal requirements, and your company’s goals around designing leave policies. In this post, we’ll explore key considerations and share best practices to help you navigate this gray area effectively.

How Federal FMLA Handles Holidays

The Family and Medical Leave Act (FMLA) is the cornerstone of federally mandated leave protections in the United States. Eligible employees are entitled to up to 12 weeks of unpaid, job-protected leave for specific family and medical reasons. But how does FMLA address holidays?

Continuous Leave

For employees on continuous FMLA leave, holidays generally count as part of the leave. For example, if an employee is out for two weeks and a holiday falls within that period, the holiday is included in their leave.

Intermittent Leave

For employees taking intermittent or reduced schedule leave under FMLA, holidays typically do not count unless the employee was otherwise scheduled to work on that holiday. For example, if an employee’s intermittent leave schedule does not overlap with a holiday, the holiday would not reduce their FMLA leave entitlement.

In summary, whether holidays count under FMLA depends largely on the leave’s structure (continuous vs. intermittent) and the employee’s work schedule.

State Job Protection and Wage Replacement Programs

Many states have implemented their own family and medical leave programs that either supplement or expand upon FMLA protections. These programs often include wage replacement benefits and additional job protections. How these programs treat holidays can vary significantly.

Job Protection Laws

State-level job protection laws, such as those in California or New York, often mirror FMLA’s treatment of holidays. Continuous leave typically includes holidays within the leave period, while intermittent leave only considers holidays if the employee would have been scheduled to work.

Wage Replacement Programs

State wage replacement programs, such as California’s Paid Family Leave (PFL) and New Jersey’s Family Leave Insurance (FLI), calculate benefits based on the duration of the leave and the employee’s earnings. These programs typically do not distinguish between regular workdays and holidays, issuing payments for the entire approved leave period regardless of specific calendar dates.

How Companies Should Factor Holidays and Shutdowns into Paid Parental Leave Policies

Individual holidays and company-wide holiday shutdowns, such as those often observed during the winter season, both add complexity to parental leave planning. Should these periods count as part of an employee’s leave, or should they be treated separately? 

Let’s weigh the considerations of including holidays and shutdowns in leave calculations:

Pros 

1. Simplicity and Administrative Ease- Including holidays and shutdowns within the leave period streamlines administrative processes. HR teams can apply a uniform policy, reducing the need for case-by-case exceptions.

2. Cost Management- For companies offering paid leave, including holidays and shutdowns in the leave duration can help control costs.

3. Alignment with Standard Practices- Many federal and state leave programs include holidays within leave periods, making this approach consistent with legal frameworks.

Cons 

1. Potential Employee Dissatisfaction - Employees may feel their leave is shortened unfairly when holidays or shutdowns overlap with their leave period, and may perceive that they receive less benefit than others.

Recommendations for Designing Leave Policies

To effectively manage holidays and company-wide shutdowns within leave policies:

• Be Transparent- Clearly communicate how these periods are treated in all leave policies.

• Balance Costs and Benefits- Weigh the financial impact against the morale and retention benefits.

• Engage Employees- Gather input to understand workforce preferences.

• Maintain Consistency- Ensure alignment across all leave programs for simplicity and clarity.

• Invest in a Leave Management Tool- This can ease the administrative burden of excluding holidays from leave programs.

Thoughtful leave policies that address both holidays and shutdowns can enhance employee satisfaction and operational efficiency, positioning your company as an employer of choice.