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Many employers have a holiday pay policy in which employees are required to work both the day before and the day after a holiday to receive holiday pay. While policies like these are seemingly innocuous ways for employers to incentivize employees to work the days surrounding a holiday, for years they have been under scrutiny for the potentially negative incentives they create. The concern is that employees will hesitate to take protected leave, such as Oregon sick leave, Paid Leave Oregon (PLO), or leave covered under the Oregon Family Leave Act (OFLA), if they will be denied holiday pay for taking such leave.

Up until recently, there was no published guidance from the Bureau of Labor & Industries (BOLI) regarding the interaction between Oregon protected leave and holiday pay. However, in January 2026, BOLI published its 鈥�2026 Leave Laws鈥� handbook for Oregon employers.

The handbook clarifies that if employees are on protected leave, they are entitled to holiday pay if they would have otherwise been entitled to holiday pay had they been working. Hence, a policy that requires employees to work both the day before and the day after a holiday to receive holiday pay is not permitted. To protect themselves from liability, employers should update their policies to ensure that employees are paid for holidays even when they are on protected leave.

The risk of liability for employers comes from the interference and retaliation provisions of the relevant protected leave laws. These provisions, which are present in OFLA, PLO, Oregon sick leave and many other state leave laws, mean that denying a benefit based on the use of protected leave is considered retaliation. Because holiday pay is considered an employer-provided benefit, if employees are denied holiday pay because they, for example, used Oregon sick leave on the day before or the day after the holiday, they could claim this was retaliation for their use of protected leave. The same rationale applies to employee attendance policies that reward employees based on attendance. Employees on protected leave cannot be denied these benefits due to their protected absences.

By contrast, policies that require employees to work the day before and the day after a holiday to receive holiday pay are still considered acceptable under the federal Family and Medical Leave Act. The FMLA regulations explicitly state that entitlement to benefits such as holiday pay 鈥渋s to be determined by the employer鈥檚 established policy for providing such benefits when the employee is on other forms of leave (paid or unpaid, as appropriate).鈥� This means that FMLA-eligible employers are not at risk under the FMLA retaliation and interference provisions for implementing a policy like the one mentioned above, but they are at risk for a legal challenge over state protected leave.

The BOLI handbook provides other helpful insights on protected leave as well. For example, the guidance clarifies that if an employee takes a full week of PLO when the employer is closed for one day due to a holiday, the employee may still be able to use PLO for the holiday. Because PLO is a state-run program and eligibility is not determined by employers, this decision is made by the state. However, BOLI indicates that, in circumstances like this, the claim would likely be granted for the full week.

In the same vein, the BOLI handbook states that for employees who use PLO during a holiday closure, employers should not deny holiday pay for that day. Employers can limit an employee鈥檚 pay to no more than 100 percent of what they otherwise would have earned, but denying holiday pay altogether may expose the employer to liability.

While BOLI guidance is not binding law, it does provide insight into the agency鈥檚 position on holiday pay policies. Moreover, employers could be subject to liability under the relevant protected leave retaliation and interference provisions for enforcing policies that contravene this guidance. Employers with questions about whether their holiday pay policy is compliant with BOLI鈥檚 guidance should contact a trusted legal advisor.

Hannah LaChance is an attorney with Barran Liebman LLP. She can answer questions about protected leave and holiday pay policy compliance. Contact her at 503-276-2112 or聽[email protected].

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the author and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91视频 guarantees the accuracy or completeness of any information published herein.