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Floating holiday policy: what it is, why offer it, and how to set it up

What a floating holiday is, why companies offer one, what federal law says about holiday pay, and how to set up a floating holiday policy in StartEase block by block.

EmployersFloating holiday7 min

What is a floating holiday policy?

A floating holiday is a paid day off the employee picks, for example a religious or cultural holiday, a birthday, or a day that matters to them. It works alongside your fixed company holidays.

Why companies offer it

It respects holidays your company calendar does not include.
It is simple: a few days a year, used one at a time.
It costs little to run because the days are known up front.

What the law says, in short

Federal law does not require holiday pay. The U.S. Department of Labor says the FLSA does not require payment for time not worked, such as vacations or holidays, federal or otherwise.

How to set up a floating holiday policy in StartEase

Open Time › Time off and scroll to Policies.
Under Add a policy, choose Floating holiday, then select Add policy.
Fill in each block below. The example is a sample "Floating holiday" policy: your company chooses its own numbers.
In Review and turn on, read the summary sentence and select Turn on this policy.

Basics

The name, the kind of leave, whether it is paid, and what employees read about it. More on this block.

Box	What it means	In this example
Policy name	The name employees see when they ask for time off and on their balances. Required.	"Floating holiday"
Kind of leave	What the leave is for. It picks the help link and the extra checks. It does not change how the balance is counted. Required. PTO or vacation: Rest and holidays the employee chooses. Sick: Illness or care. Needs a payroll admin to confirm it before anyone can use it. Floating holiday: A holiday the employee picks. Personal day: A day for anything personal, no reason needed. Bereavement: Time after a family member dies. Jury duty: Time on jury service. Learning and development: Time for a course, exam or training. Parental: Time after a birth, adoption or foster placement. Volunteer: Time to help a charity or the community. Weather or emergency: When the workplace closes. Custom: Anything else, with your own name.	Floating holiday
Pay	Whether the hours are paid. Required. Paid: The employee is paid for the hours, at their usual rate. Unpaid: The hours are recorded but not paid. Unpaid leave reduces pay only where the pay rules allow it, so it does not cut an exempt salary when the rules forbid that.	Paid
Description for employees	Up to 600 characters on My time off: who qualifies and what the leave covers. Keep medical details out.	"Two days a year for a holiday of your choice. Ask a week ahead."

Earning

How the balance grows. Nothing is earned until a payroll is approved. More on this block.

Box	What it means	In this example
How it is earned	How the balance grows. Required. By hours worked: The employee earns leave as they work, for example 1 hour for every 30 hours worked. Part-time staff earn less, full-time staff more. A fixed amount each year: Everyone covered gets the same number of hours a year, for example 80. Unlimited (no balance kept): No balance is kept. Each request is still approved and recorded. Use it when the need decides the time, as with jury duty.	A fixed amount each year
Hours a year	Only for "A fixed amount each year". For example 80 for two weeks.	16 Two 8-hour days a year.
When it is added	Only for "A fixed amount each year". Spread over each paycheck: A share is added with every approved payroll: 80 hours on a biweekly schedule adds about 3.08 hours a payroll (80 ÷ 26). All at once on the reset date: The whole year is added on the first day of the policy year.	All at once on the reset date Both days are there on January 1.
More hours with years of service	Only for "A fixed amount each year". Select Add a step, then type the years and the new hours a year, for example 3 years: 120 hours a year. Remove deletes a step.	None
Policy year starts	When caps and carryover are counted again. Not shown for unlimited policies. On the same date for everyone: Every employee's policy year starts on the Month and Day you choose, for example January 1. On each employee's hire date: Each employee's policy year starts on the anniversary of their hire date.	On the same date for everyone
Month	Only for "On the same date for everyone". January to December.	January
Day	Only for "On the same date for everyone". 1 to 31. A day past the end of the month uses the last day.	1

Rules

Waiting periods, negative balances, a yearly use limit and payout at exit. More on this block.

Box	What it means	In this example
Waiting periods are counted in	The unit for the two waiting periods below. Days from the hire date: For example 90 means 90 calendar days after the hire date. Hours worked: For example 80 means after 80 hours worked in approved payrolls.	Days from the hire date
Before earning starts	Not shown for unlimited policies. Nothing is earned before this. Blank for none.	Blank
Before it can be used	Leave can be earned but not taken before this. Blank for none.	Blank
Allow a negative balance	Not shown for unlimited policies. Ticked: an employee may borrow ahead of what they have earned.	Unticked
Most hours that can be used in a policy year	A yearly limit on hours taken. Blank for no limit.	Blank
Pay unused hours in the final paycheck	Not shown for unlimited policies. Ticked: unused hours are paid when someone leaves. Where the work state's rule requires payout, payroll pays it whatever you choose.	Unticked

Caps

Limits on the balance. Not shown for unlimited policies. More on this block.

Box	What it means	In this example
Most hours earned in a policy year	Earning stops for the year at this number. Blank for no cap.	Blank
Most hours the balance can hold	Earning pauses while the balance is at the cap and starts again when leave is used. Blank for no cap.	Blank
Most hours carried into the next policy year	Hours above this are dropped when a new policy year starts. 0 means nothing carries over. Blank carries everything.	0 Use them within the year.

Requests

How employee requests are handled. More on this block.

Box	What it means	In this example
Approve employee requests automatically	Ticked: a request that follows the rules is approved at once. Unticked: the Employer or payroll team approves each one.	Unticked
Most calendar days in one request	For example 10. Blank for no limit.	Blank
Days of notice an employee must give	For example 3 means the first day must be at least 3 days away. Leave you record yourself is not checked. Blank for none.	7 A week's notice lets the team plan.

Employees

Who the policy covers and where each balance starts. More on this block.

Box	What it means	In this example
All employees, including people added later	Ticked: everyone is covered, now and later. Unticked: tick each employee in the table.	Ticked
Starting balance (hours)	Hours the employee already has, for example from your old system. Blank starts at 0.	Sample balances
As of	The date that starting balance is correct. Earning counts from this date, or from the policy's start date if blank.	Blank

Review and turn on

The last check before employees can use the policy. More on this block.

Box	What it means	In this example
Ready, or "N to finish"	Ready means every required box is filled. "2 to finish" means two boxes marked Required are empty.
The summary sentence	The policy in one line, for example "Paid. 80 hours a year, spread over each paycheck". Read it before you turn the policy on.
Turn on this policy / Turn off	Turns the policy on for the employees covered, or off. A new policy starts turned off.
Delete this policy	Only while no leave has been recorded on it. After that you can turn it off but not delete it.

Common questions

How is a floating holiday different from a company holiday?

A company holiday is the same day for everyone, set once on the Time off page (see Company holidays). A floating holiday is a day each employee chooses.

Should floating holidays carry over?

Most companies say no, so the days are used each year. Set Most hours carried into the next policy year to 0.

What the law says

Federal law does not require holiday pay. The U.S. Department of Labor says the FLSA does not require payment for time not worked, such as vacations or holidays, federal or otherwise.

Sources (government sites):

Note. This article explains how StartEase Payroll works and what the federal pages linked below say. It is not legal advice. State and city laws can add rules. Check them for each place your employees work.

Next: Personal day policy: what it is, why offer it, and how to set it up