The vast majority of companies have a policy for paid time off that is for vacation, sick, and/ or personal use plus a policy regarding pay for declared "company holidays"---ranging from 6 to 9 or so days each year.
I am assuming from your question that you are requiring people to save their vacation time to use on what would normally be declared company holidays at most companies. That is unusual; and I hope that all employees understand that they are supposed to be saving their vacation time for holidays.
The Fair Labor Standards Act requires you to pay an exempt employee for the entire week in any work week in which the employee has put in work time. This would not be an exception. It would be different for a non-exempt employee. You would not be required to pay a non-exempt employee for a holiday after s/hes used all of his/her paid time off as long as you apply this rule consistently.
Question added to topic Human Resources • September 13, 2007
Should I still pay an employee for holidays after he's used all his paid time off?
Our employee has used all of their paid time off. We decided to be closed the Thursday and Friday after the 4th of July. He is a salaried employee. Should he get paid for these days?
Penny is a seasoned human resources executive and consultant with over 25 years of diverse business experience in advising enterprise leaders on employment-related matters.