Floating Holiday

What Is a Floating Holiday?

A floating holiday is a paid day off that each employee can decide when to take. It’s called a floating holiday because it “floats” or moves to the date when the employee takes it every year.

Floating holidays are generally given in addition to the typical paid holidays that most employers provide as a benefit.

Floating Holidays vs. Paid Time Off (PTO)

Both floating holidays and PTO are forms of paid leave; however, they’re used in different circumstances. As mentioned above, employees use floating holidays at their discretion to celebrate special occasions (such as birthdays, anniversaries, cultural events, etc.). However, they don’t roll over year to year.

PTO is also compensated time off of work, and employees can use it as they see fit. Time is usually measured in hours and covers absences like sick days, vacations, and personal time. And unlike floating holidays, unused PTO hours can usually be carried over to the next year.

Floating Holidays vs. Paid Holidays

Floating holidays are also different from paid holidays. The biggest difference is that employees can take a floating holiday on any day whereas a paid holiday happens on a specific date.

Paid holidays are national, state, or religious holidays that employers can choose to give as compensated days off to employees. Federal law doesn’t require employers to give employees paid holidays. The Fair Labor Standards Act (FLSA) only mandates requirements around minimum wage and overtime pay.

Some of the most common paid holidays include:

• Memorial Day
• Independence Day
• Labor Day
• Thanksgiving Day
• Christmas Day
• New Year’s Day

Other holidays—including Martin Luther King Jr. Day, Presidents’ Day, and Christmas Eve—may be included, but it’s ultimately up to employers.

Floating holidays aren't recognized as national holidays and can be taken at the employee’s discretion. For example, Muslim employees could take a floating holiday to celebrate religious feast days like Eid al-Fitr.

How Is a Floating Holiday Used?

A floating holiday can accommodate diverse needs and interests. Some employees use it to take the day off for a holiday that isn’t part of the company’s paid holidays but is important to them—such as a religious or cultural observance.

Others take their floating holiday on a special occasion, such as their birthday or to attend a wedding. And others may decide to use their floating holiday for any reason, whether to go fishing at the lake or enjoy a quiet day relaxing at home.

However, some organizations may only allow employees to choose their floating holidays from a company-provided list of cultural, religious, and government holidays and events. Also, some organizations may have blackout dates during especially busy times at work when no one is allowed to use their floating holidays.

Pros and Cons of Offering Floating Holidays

While offering floating holidays isn't required by the federal government, there are benefits to including them, including:

• Keeping businesses running during holiday periods: Many major holidays coincide with businesses’ busiest seasons. Rather than lose revenue, employers can offer floating holidays, making it possible for employees to take time off after the busy season is over.
• Reducing administrative burdens: Floating holidays can minimize scheduling conflicts, reducing the time HR personnel or managers spend resolving scheduling issues.
• Providing employees with a better work-life balance: Some employees may prefer to continue working during holidays and take time off at a later date. Floating holidays provide employees with that flexibility, increasing their work-life balance.
• Creating an inclusive work culture: Some religious or cultural celebrations aren’t considered paid holidays. Adding floating holidays to employees’ benefits builds an inclusive work culture and enables employees to observe celebrations that matter to them.

However, there are also some disadvantages to offering floating holidays:

• Paying employees for unused holiday time: Employees who choose not to take floating holidays still receive pay for this time, which can result in wasted revenue.
• Possible increase of employee dissatisfaction: It’s important to keep floating holiday approvals equal; employee morale may be affected if some floating holiday requests are approved and others aren’t.
• Not all floating holidays can be approved: Depending on scheduling, not all floating holiday requests can be approved by HR, especially if multiple employees request time off around the same time. This can leave businesses short-staffed.

Do Companies Have to Provide Floating Holidays?

Just as there are no laws requiring employers to provide paid days off for holidays like Christmas or Labor Day, there are no legal requirements to provide floating holidays. However, some labor unions may negotiate a floating holiday for their members as part of their contract.

What Should a Floating Holiday Policy Include?

To encourage employees to take advantage of their floating holidays and prevent misunderstandings and abuse, every organization that offers a floating holiday should establish a policy about its use. This policy should be available in the employee handbook.

It should include the following rules and clarifications:

• Whether the floating holiday is available at the beginning of the year or is earned during the year
• Whether it’s available to both full-time and part-time employees
• How far in advance a floating holiday must be scheduled and approved by the employee’s supervisor
• How long new employees who are hired during the year must wait to qualify for the floating holiday
• Any other restrictions on how or when a floating holiday may be used

Can a Floating Holiday Be Carried Over into the Next Year?

There are no federal laws about this, but check your state laws; regulations may vary. In most areas, each company can decide this matter for itself. Most organizations have a use-it-or-lose-it policy where the floating holiday is lost if it’s not used by the end of the calendar year.