Your employees work hard. And, much like you, they deserve a day off every now and then.
Your paid time off (PTO) policy gives your staff a certain number of days they can use to take vacation or recover from the flu.
But, as you sort out these paid days, you might hear another term crop up: floating holidays.
What Is A Floating Holiday?
A floating holiday is a paid day off from work that is offered in addition to regular observed paid holidays. It isn’t tied to a regular holiday schedule and can instead be taken on a day chosen by the employee.
Some employers offer paid floating holidays, while others offer unpaid. Much like observed federal holidays, in the private sector there is no mandated law that requires employers to offer PTO on these days—it’s entirely up to the discretion of the employer.
Is Memorial Day Considered A Floating Holiday?
Well, it depends. Memorial Day, which occurs on the last Monday of May, is one of several federal holidays. This means that federal offices are closed on this day and all federal employees are paid during that time off.
Many private sector employers follow that same precedent and close their offices and operations on Memorial Day. That means it’s usually not a day when employees need to use a floating holiday.
However, remember that in the private sector, it’s up to the employer to decide whether Memorial Day is given as a paid day off or not.
How Do Floating Holidays Differ From Normal PTO?
Many companies offer a variety of PTO days as part of their benefit package—including vacation time, paid holidays, sick leave, and even personal days.
Some companies choose to offer a limited number of floating holidays that employees can use in addition to those. These holidays are offered separately from their regular PTO and will be differentiated in their benefits package.
The specifics around how this is handled will differ from employer to employer (and we’ll dig into this more in the policy section below). However, some key differences to note include:
- There are usually rules and restrictions about when an employee can use a floating holiday vs. vacation time.
- Unlike most PTO, typically floating holidays can’t be cashed out when an employee leaves a company and they can’t be carried over to the following calendar year.
- PTO is usually accrued by employees over time, whereas a set number of floating holidays are typically given to employees when they join a company.
What Is A Personal Day Off?
Some employers also breakout personal days as part of their PTO policy. For example, they might offer the following to employees in a standard calendar year:
- 10 paid vacation days
- 6 paid federal holidays
- 3 paid sick days
- 3 paid personal days
So, what exactly is a personal day? It’s a paid day off that employees can use when they aren’t actually sick or on vacation—whether they need to move, be at home for a repair, take their kid to the dentist, or take care of any other personal commitment.
Some employers don’t break out personal days and instead lump them in with sick leave or vacation days. Again, it’s completely up to you how you choose to approach this with your employees.
Are Employers Required to Offer Floating Holidays?
Here’s the short answer: Nope. There’s no law or legal requirement for employers to offer this type of time off.
Even though it’s not a requirement, some employers decide to offer these as an added perk or benefit for their employees.
A report from the Society for Human Resource Management (SHRM) found that 30% of employers offer paid floating holidays outside of personal days or standard holiday time. A separate SHRM report found that those that do offer these days typically offer an average of two per calendar year.
Should Employers Offer Floating Holidays?
Bear in mind that, in the private sector, you don’t have to offer this time off to your employees. But even so, there are numerous employers who choose to do so anyway, as it has the following benefits.
1. Provides Greater Flexibility
No two employees are alike—they all require something different from you, and that applies to their PTO as well.
That’s one of the many benefits of these floating days. They give employees the flexibility to take time off that works best for them.
For example, there are a number of alternative religious holidays that don’t fall into a federal holiday schedule—whether it’s Yom Kippur, Rosh Hashanah, Eid al-Adha, Eid al-Fitr or numerous other holidays. Employees who observe these can use floating holidays for those days.
Or, if an employee is dealing with an emergency and has already used all of their vacation time, these unassigned holidays can help cover their unexpected day off.
2. Offers a Competitive Edge When Hiring
Do you know what carries a lot of weight in the mind of job seekers? Flexibility. And, as the above point proved, floating holidays play a key part in that.
For that reason, including these holidays in your PTO policy can demonstrate to candidates that they can build work around their lives, rather than the other way around.
That commitment to work-life balance might just give you a leg up compared to the other employers they’re evaluating.
3. Evens the Scales Between Employees
As an employer, you’ll admit that scheduling holidays and PTO for your employees can be a headache. Plus, it can breed tension and frustration among your team members.
For example, maybe you need a couple of employees to work on July 4, while the rest of the company has that day off.
Offering these floating days means they can take another day of their choosing off to compensate for that day. That way, nobody feels slighted or taken advantage of. Plus, many employees might rather have control over which day they take off, rather than opting for the federal holiday.
What Should Be Included in A Floating Holiday Policy?
If you choose to offer floating holidays to your employees, they should be documented in a formal, written policy within your employee handbook. This eliminates confusion and ensures that you and your staff are on the same page about how you’ll handle all PTO.
But, what goes into this policy? Here are a few questions that you should make sure to address in writing.
1. How Many Floating Holidays Will You Offer?
Start with the basics. How many of these holidays will employees get in a calendar year?
Keep in mind that you can also tailor this based on when an employee starts. If they were hired in the first half of the year, you might give them two floating holidays. But, if they were hired in the second half, you might only offer one.
Clearly state how many of these days your employees get, as they’ll need that information to plan their PTO accordingly.
2. When Can A Floating Holiday Be Taken?
You’re allowed to institute some rules around when these holidays can be taken. Some businesses allow employees to take them at any time, while others block specific dates (like high-sales times in seasonal businesses) when they can’t be used.
You could also set certain days when employees can use their floating days, such as on their birthdays or religious or cultural holidays.
This limits things for your employees, but also makes PTO easier for you to manage, as employees can’t take these holidays any day of the year.
3. Can Floating Holidays Be Carried Over?
Typically, employers don’t allow these unused floating holidays to be carried over to next year. They need to be used within the current calendar year (before the end of the year).
Regardless of how you choose to handle this, it should be clearly documented in your policy so that employees know how to manage and allocate their PTO.
4. How Should PTO Be Requested and Tracked?
This question applies to all of the PTO you offer, including vacation time, sick leave, and more. Employees can’t be in and out of work whenever they feel like it, as that will lead to major staffing nightmares for you.
So, document the rules for how employees should request this time off and how you’ll keep track of it.
Is there a request form they need to fill out? Do they need to provide a specific reason? Who needs to approve it? Will their time off be tracked in your payroll software, in a spreadsheet, or somewhere else?
Having all of this written down will streamline your process and make things far easier for you and your employees to manage.
5. Are There State Laws You Should Take into Account?
Rules about floating holidays can differ from state to state. In some states, it’s illegal not to payout a perk like PTO when an employee leaves your company. That’s true in California, where floating holidays need to rollover from year to year and also need to be paid out when an employee leaves.
In addition, if you allow an employee to take this type of holiday at any time during the year, it’s usually considered vacation time in the eyes of the law, which means your state might require that you cash it out when an employee leaves.
Make sure you check into what laws your state has so that you can ensure your vacation policies comply.
Floating Holidays Are Not A Requirement, But They Can Still Be A Good Idea
In the private sector, you're not mandated to provide these days to your employees. However, offering this type of time off is a great perk and shows your team that you value their work-life balance.
These paid days can be a lot to keep track of, which is why many companies are moving away from structured PTO and instead opting for unlimited or flexible policies instead.
Whichever route you decide to go, you need to make sure that you’re prepared to take that paid time into account and run payroll correctly. Sign up for Hourly and run payroll seamlessly.