Many employers offer their employees bonuses and extra time off for the year-end holidays. Here are a couple reminders to keep in mind during this season:
- End-of-year or holiday bonuses should be included in payroll and reported as taxable compensation.
- The Fair Labor Standards Act doesn’t mandate that employees be paid for holidays. However, if you do provide nonexempt employees with holiday pay and the employee also works overtime during the holiday week, you don’t need to factor the holiday pay into their regular rate calculation as you figure overtime rates. Holiday pay is idle time that is excluded from regular rate calculations.