Question:

My employee recently resigned from her position. We offer active employees one floating holiday per year. The employee who resigned is requesting that we pay out her floating holiday with her final paycheck. Are we required to do that? 

Answer:

No, you do not have to pay out the floating holiday. In Massachusetts, employers are not required to provide paid holidays, and there is no state law that mandates payout of holiday time—floating or otherwise—upon termination. At separation, the only required payout beyond final wages is any accrued and unused vacation time.

Tips:

Be sure your written policy clearly states that holidays are for active employees and are not paid out upon termination.

Policy Language Matters 

To ensure employees clearly understand your organization’s holiday benefits, your holiday policy should outline all expectations and eligibility requirements. Be sure to specify that employees must be actively employed to receive holiday pay, note whether working the day before and/or after the holiday is required, and make it clear that unused holiday pay will not be paid out upon termination. 

We’re Here to Help

If you’re an AIM member and you’re unsure how your policy should be structured or applied, our HR Helpline is here to help. Call 1-800-470-6277 or email Helpline@aimnet.org to speak directly with one of our HR experts, who can guide you through these situations and ensure consistent application of your policies. We can also review or update your employee handbook to confirm it addresses floating holidays and other time-off benefits. Learn more about our Employee Handbook Services for added peace of mind and compliance support.