Party Time! Do You Have to Pay Employees to Attend a Holiday Party?

As employers prepare to celebrate the holiday season with their teams, wise HR professionals will consider whether their non-exempt employees must be paid for their time at a holiday party.

In general, employers are not required to pay non-exempt employees for holiday party time, as long as:

1. the employee’s attendance is voluntary and
2. the employee is not asked to work during the party

The Fair Labor Standards Act (FLSA) and state wage and hour laws require employers to pay non-exempt employees for all hours they work. Time spent at holiday parties is considered hours worked if employee attendance is mandatory or the employer uses the employee for help running the event.

Is Attendance “Voluntary” at Your Party?

Before you decide not to pay non-exempt employees for their time attending a work party or a community event (e.g., awards dinner, ribbon cutting, charity event), you must determine if the employee can skip the event with no consequences, meaning “no adverse effect” on their work conditions or employment prospects.

If the employee will suffer a consequence for skipping the event, such as a negative impact on their performance reviews, they should be paid for their attendance.

The analysis may not end there, though. For instance, even if the employer intends for attendance to be voluntary, leadership should ask:

• Did the invitation “strongly encourage” employee attendance?
• Did the employee’s manager imply that participation in company-sponsored activities would be factor in promotion or raise decisions?

Even telling an employee that management will notice if they do not show up could create enough pressure that the Department of Labor (DOL) would not deem an employee’s attendance truly voluntary.

Also, employers should be mindful that scheduling events during the regular workday will make it more difficult to show that employee attendance was voluntary.

Are Non-Exempt Employees Working at Your Party?

Next, employers should understand that complete relief from work duties does not only mean non-exempt employees must be relieved from their regular work activities. It also means if you assign any task to an employee during an event (e.g., making name tags, running a raffle, cleaning up) or expect them to entertain a client or the group, then employers should be paying them for their time.

As a rule of thumb, employers should consider whether your employee’s actions benefit the company. If they are, the non-exempt employee should be paid. As an alternative, their tasks could be assigned to an exempt employee who can perform those additional duties without hourly pay. This is true even if the employee volunteers for the duty or activity.

Key Takeaway

With all the above in mind, employers should plan holiday parties and community events to attract non-exempt employees without additional incentives and without relying on their labor. Non-exempt employees should know their reward for attending will be a good time with their coworkers and that they will not be asked to work.

If your holiday party cannot meet those rules, think of the hourly pay as a holiday bonus!

If you have questions about holiday party pay or any other wage and hour issues, please contact the author or this article or any member of the Woods Rogers Labor & Employment team.