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Most state laws, including those of Texas, do not require employers to observe any holidays or to pay employees if time off for holidays is granted.
Just as with paid leave, though, it is essential to set holiday pay policies down clearly in writing, since state payday laws will enforce whatever the written policy says.
The policy should cover what happens if an employee works during a paid holiday, i.e., does the employee simply get double pay for that day, or can the employee have some other day off to make up for the missed holiday? Some companies have policies providing "compensatory holidays" in the event a paid holiday is missed through no fault of the employee, like in this situation in which the employee works on the holiday - in such a case, the comp holiday would be used on a day that is mutually convenient for the employee and the company. Other companies provide that paid holidays are lost if the employee would not have been at work in any event (a holiday that falls in a vacation week or a period of a leave of absence), or if the employee worked on that day. Some companies make no provision at all. However, the only case in which holiday pay is required is the one in which the written policy itself expressly promises such a payment, i.e., if the policy indicates that holiday pay will be given for that day, regardless of whether the employee works or does not work that day. Otherwise, the presumption is that holiday pay is only for people who would have been working on that day, but for the holiday. In other words, the presumption coincides with the most commonly-accepted understanding of holiday pay, which is that it is a benefit given to employees who do not work on a holiday so that they might have a full paycheck for the week in which the holiday occurred.
Do not count paid holiday hours toward "hours worked" for overtime or FMLA eligibility purposes.
Companies with 15 or more employees and thus subject to religious discrimination laws may need to allow employees with religious convictions time off on certain holidays in order to observe religious customs, unless such time off would be an undue hardship for the business (the burden of proving that would be on the employer).
"The Company will generally observe the following days as paid holidays:
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