The Labor Law Corner in the November 8th CalChamber Alert Newsletter reported that holiday pay is not mandatory in California; therefore it is completely within a company’s discretion whether to pay an incentive (overtime) rate to employees who work on holidays.

Many employers do pay an incentive rate so as to lessen the "sting" of having to work on a holiday, but it is not mandatory per California law. Any amount is equally allowed, given, of course, that minimum wage is satisfied. Having a "waiting period" before earning holiday pay is permissible for your nonexempt employees, as long as you apply the waiting period to all newly hired nonexempt employees.

Overtime 

Keep in mind that if a nonexempt employee is required to work a holiday after working 40 hours in a week, overtime would indeed apply at the applicable rates. Overtime also would result if the employee works more than eight hours on that holiday.

In addition, an exempt employee must be paid for holidays if he/she is ready, willing and able to work, regardless of if that exempt employee actually works the holiday.

Some employers enter into agreements with their employees to pay holiday pay, agreeing on terms between the employer and employee, sometimes negotiated as part of an employment contract.

Employers may adopt policies and practices that work with their individual schedules, as long as employees receive the required minimum wage and overtime, if applicable.