Let’s start with some facts. Every year, American employees leave 430 million vacation days unused. That’s a shocking amount of time that’s up for grabs.

Fortunately, as a small business owner, you have the ability to give your employees a little extra nudge to finally take some much-deserved time off—especially when it comes to acknowledging common holidays.

As a business owner, however, it’s also a little more complicated than simply blocking off holidays on the company calendar. Because while the Federal Government provides employees with 10 paid holidays each year, smaller, private employers aren’t necessarily required to offer any of these options. That’s why it’s important to know which days you should absolutely consider giving off to your employees, and which ones might be a little more negotiable (depending on your line of business). It’s also crucial that business owners know how to build out a holiday pay schedule that uniquely works for their company.

Here are some of the most commonly asked questions from small business owners on federal holidays—and how they can navigate them.

As a small business owner, am I legally required to offer holiday pay?

Well, technically no. For private sector businesses (aka anything that’s not a federal business), there are no laws that require employers give their workers federal holidays off. And if an employer does give their employees holidays off, there’s no federal requirement for the time off to be paid time off at all.

However, it’s generally considered pretty awesome if you do offer paid time off for federal holidays. Granting paid time off can go a long way when it comes to fostering a positive work environment that employees genuinely want to be a part of. In fact, according to a study by the Society for Human Resource Management (SHRM), “paid time off” was listed as the second most desirable employer-provided benefit, ahead of 401k contributions.

So, I definitely want to offer my employees paid holidays. Which ones should I cover?

The best place to start when sorting out federal holidays is with this comprehensive 2019 federal holiday list:

  • Tuesday, January 1: New Year’s Day
  • Monday, January 21: Birthday of Martin Luther King, Jr.
  • Monday, February 18: Washington’s Birthday
  • Monday, May 27: Memorial Day
  • Thursday, July 4: Independence Day
  • Monday, September 2: Labor Day
  • Monday, October 14: Columbus Day
  • Monday, November 11: Veteran’s Day
  • Thursday, November 28: Thanksgiving Day
  • Wednesday, December 25: Christmas Day

Do you still need some help deciding which ones to cover? According to the Society for Human Resource Management, most employers offer these paid holidays: New Year’s Day (95%), Memorial Day (94%), Fourth of July (76%), Labor Day (95%), Thanksgiving Day (97%), Friday after Thanksgiving (76%), and Christmas Day (97%).

These holidays, while recognized on the federal level, are a little less common for small business—but still nice-to-haves if possible: MLK Day (37%), President’s Day (35%), Good Friday (28%), the day before Fourth of July (60%), Columbus Day (16%), Veterans Day (20%), Christmas Eve (47%), the day after Christmas (26%), and New Year’s Eve (23%).

How do I go about making paid holidays an official thing for my company?

You have a few options:

Consider Introducing Floating Holidays To Your Company Policy

Today, more and more companies are introducing floating holidays to their paid time off guidelines. A floating holiday is a paid day off that can be utilized at the employee’s discretion. Technically, a floating holiday is the same as a vacation day. But a floating holiday option can help companies with diverse employee backgrounds more visibly recognize an employee’s decision to observe any religious holidays. These can be in addition to some of the more common holidays listed above.

For Non-Salaried Employees, Add Paid Holidays As A Bonus Line-Item

You can either add a commensurate number of hours worked to the pay period to make up for the shortfall on the actual holiday or add a line-item bonus, paid out at the value of the holiday time.

And What About Your Salaried Employees?

It’s your call. It’s up to you to slot the holidays that matter into your company calendar and share it with the team. Standard pay period compensation continues as normal without debiting vacation hours to cover office-wide approved holiday time out of the office.

As you're determining which holidays to provide PTO for, you'll need to consider how that fits into your overall PTO policy. Here are a few must-haves as you solidify your guidelines:

Your Policy Definitions

You’ll need to clearly define what PTO is, what it covers, how many days are available, and how it’s tracked.

You may consider traditional leave, which distinguishes the type of time you’re taking off (like sick days, personal days or holidays). You could also have a PTO bank. This gives employees a predetermined amount of days off, and employees can use them however they want. Unlimited PTO is an option, too, and lets employees take as many days as they want for whatever reason.

Whatever policy you choose, it’s important to clearly define and document which holidays the company officially has off, either through an employee handbook or a company calendar. If you require your employees to use PTO for these holidays, make that clear, too. This outlines exactly what requires a formal PTO request, and what doesn’t.

Employee Eligibility

You need to clearly outline which employees are eligible for PTO and holidays. For example, maybe only full-time employees are eligible for PTO, but all employees (even if they’re part-time or hourly) are guaranteed time off for official company holidays.

The Request Process

Employees need to know exactly how and when they should request off, and how PTO requests may differ from holidays. For example, you may ask that employees submit a request to their supervisor for two weeks in advance. Whereas holiday time off is already blocked off in the company calendar and requires no official request.

Your Tracking System

Ultimately, you’ll want to set up your payroll software to accommodate all of these decisions. Does your software know it shouldn’t deduct vacation hours when a full-time employee’s week adds up to less than 40 hours because of a holiday? Can you produce reports that show you’ve provided holiday pay? Do your employee pay stubs clearly reflect that holiday time has been paid? These are all the nitty-gritty details you’ll want to lock in once you establish your paid holiday policy. And trust us, your employees will thank you.