Are Floating Holidays for Small Businesses Really Best?

Floating holidays for small businesses can seem difficult to manage, but they’re a benefit that employees really enjoy. A floating holiday allows an employee to take paid time off to meet their own personal needs even when the company does not recognize the holiday or event. In today’s diversity-focused world, offering floating holidays may help mitigate some of the risks associated with diversity concerns. So, are they worth offering and managing as a small business owner?

What is a Floating Holiday?

Many companies offer paid holidays. This allows an employee to have a holiday off while still receiving pay (assuming the holiday falls on a scheduled workday). Paid holidays are generally streamlined in that the entire company takes the day off (or at least offers the day off). Floating holidays offer the same benefit of paid time off, but they allow the employee to choose which days to take.

Why Should You Consider Implementing Them?

Everyone has unique needs. For example, some of your employees may wish to celebrate Christmas. Others prefer Rosh Hashanah or Hanukkah. Others may not celebrate any holiday and instead wish to take their birthday off. By letting your employees select their holidays, you meet their needs and honor their cultural beliefs. In short, floating holidays allow employees to have a better work-life balance.

Why Are Floating Holidays Concerning?

Some small business owners mistakenly believe that floating holidays are difficult to manage. In reality, they don’t have to be as long as you put a policy in place that’s thorough and explains expectations. With proper guidelines, employee tracking software can handle all of the other components of the process. It can also help minimize the risk of unfairness, employees taking too much time off or a scheduling confusion. A secondary concern is laws regarding vacation time.

Some states have specific laws about providing vacation time, sick time and other paid- and non-paid holidays to workers. While laws differ from state-to-state, nearly all have a common element — workplace time-off rules must be equal to everyone. This can make floating time off troublesome if not equally applied to every employee and defined clearly. Mistakes could even lead to wage and labor disputes. Employers can avoid this by having a strong structure in place outlining what floating holidays are, how they work, who is entitled to them and why they are fair across the board.

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Creating an Effective Floating Holiday Policy

If you decide to offer this benefit, you should make sure to put in place a comprehensive floating holiday policy. Here are some tips for creating an effective policy:

  • Establish when employees can take time off. If no specific period is outlined in the policy, the employee may take their paid time off at any time. Management should allow the employee to take this time when they need it.
  • Determine if the time is accrued. Establish whether any time must be put in prior to obtaining the paid time off. For example, a company may award one floating holiday per six-month period.
  • Set ground rules for any carry-over time. Usually set along the same guidelines as other paid time off, floating holiday time can carry over to the next year if the company chooses. Because there are no laws governing these requirements, employers can decide that paid time off must be taken during the calendar year or lost.
  • Establish a tracking process. Managers or software programs can track employee time off. Floating holiday time needs to be tracked as well and can be done within these same methods.
  • Avoid blackout periods. Try not to designate specific times of the year where employees cannot take floating holidays. This creates employee frustrations, which this policy aims to minimize.
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Floating holidays for small businesses can offer your company a leg up on the competition in a tight labor market. To be successful, though, they must be thoroughly organized and managed within all state wage and hour guidelines.

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