Are Company Events Paid Time? Holiday Parties, Team Outings and Retreats
Quick Answer
For hourly employees, company events are generally paid time when they're during work hours, required, related to the job or involve any work. Federal rules say meetings and training count as work time unless attendance is outside regular working hours, truly voluntary, not directly related to the job and no productive work is done. Attendance isn't voluntary if it's required or employees are led to believe skipping it would hurt their job. A truly optional, purely social event after hours is generally not paid time.
Company events build connection and culture: the holiday party, the summer cookout, the bowling night, the annual planning retreat. But for businesses with hourly employees, they raise a practical question: do you have to pay people for the time?
The answer depends on when the event happens, whether attendance is truly optional, what happens there and whether employees do any work. This guide explains the federal rules in plain language, walks through common events, covers travel time and gives you a simple way to plan events that are fair and compliant.
Note: This is general information, not legal advice. It covers federal rules under the Fair Labor Standards Act (FLSA) for hourly, non-exempt employees. State laws may add requirements. Check with an employment attorney if you're unsure.
The Federal Test for Meetings, Training and Events
Department of Labor regulations at 29 CFR 785.27 say attendance at lectures, meetings, training programs and similar activities need not be counted as working time only if all four of these criteria are met:
- Attendance is outside the employee's regular working hours.
- Attendance is in fact voluntary.
- The course, lecture or meeting is not directly related to the employee's job.
- The employee does not perform any productive work during attendance.
If any one of these isn't met, the time is generally work time that must be paid. The regulations were written for meetings and training, and many company events include elements of both, so the same questions are a useful guide for events.
What "Voluntary" Really Means
Under 29 CFR 785.28, attendance is not voluntary if it's required by the employer. It's also not voluntary in fact if the employee is given to understand or led to believe that their present working conditions or continued employment would be adversely affected by not attending.
So "optional" has to be truly optional. If managers take attendance, make comments about who didn't come or connect attendance to reviews, the event may not be voluntary.
Common Events: Paid or Not?
| Event | Typically paid for hourly employees? | Why |
|---|---|---|
| Mandatory all-hands or team meeting | Yes | Required and job-related |
| Training session | Yes, in most cases | Usually job-related or during work hours |
| Team lunch during the workday | Yes | During working hours |
| Strategy or planning retreat | Yes | Job-related and usually required |
| Team-building activity during work hours | Yes | During working hours |
| Truly optional holiday party after hours, purely social | Generally no | Meets all four criteria if no work is done |
| Holiday party where employees serve food or work the event | Yes | Productive work |
| Optional after-hours outing, but manager says "everyone should be there" | Likely yes | Not truly voluntary |
| Customer appreciation event employees are asked to staff | Yes | Productive work for the business |
See all-hands meeting agenda and are training hours paid for related rules.
Holiday Parties
A holiday party can be unpaid for hourly employees if it meets all four criteria: held outside regular working hours, truly voluntary, not job-related and no work is done. To keep it that way:
- Hold it outside scheduled shifts.
- Say clearly in writing that attendance is optional.
- Don't track attendance or mention it in reviews.
- Keep business talk to a minimum: no presentations, training or planning.
- Don't ask hourly employees to set up, serve, clean up or run activities, or pay them for that time.
If you hold the party during work hours, or close early so everyone can attend, pay employees for the scheduled time.
Team Outings and Team Building
Team-building events, such as escape rooms, bowling or volunteer projects, are usually designed to improve teamwork, which ties them to the job. If they're during work hours or expected, treat them as paid time. If you want an after-hours outing to be unpaid, it must meet all four criteria, including being truly voluntary and purely social.
Retreats and Planning Sessions
Retreats almost always involve job-related discussion, planning or training, so time spent in sessions is generally work time for hourly employees. Plan for:
- Session time: paid.
- Meals during working sessions: treat as paid if business is discussed, since employees aren't relieved from duty.
- Travel time: may be work time depending on when and how employees travel. See travel time pay for hourly employees.
- Free time: generally not work time if employees are completely free.
- Overtime: long retreat days can push the week over 40 hours.
Overtime and Recordkeeping
Event time that counts as work time also counts toward overtime. A Friday retreat or a Saturday training can push hourly employees over 40 hours in the workweek. Make sure event time is recorded, either by clocking in or by manager-entered time, and reviewed before payroll.
Exempt Employees
Salaried exempt employees aren't paid by the hour, so event time doesn't usually change their pay. But consider fairness: if hourly staff are paid for an evening event and salaried staff aren't, explain why, and consider offering exempt employees flexible time later.
Planning a Compliant Event: Quick Decision Guide
| Question | If yes |
|---|---|
| Is it during scheduled work hours? | Pay hourly employees |
| Is it required, or could employees feel they must attend? | Pay hourly employees |
| Is it related to their job (training, planning, team building)? | Pay hourly employees |
| Will they do any work (setup, serving, hosting customers)? | Pay for that time |
| None of the above? | Generally not work time |
Sample Event Invitation Language
For a truly optional, social event:
"You're invited to our holiday party on Friday, December 12, from 6 to 9 p.m. at [location]. This is a purely social, optional event. There's no business on the agenda, and attending or not won't affect your job in any way. We hope you can join us!"
For a paid event:
"Our team planning day is Thursday, March 5, from 9 a.m. to 3 p.m. Please clock in when you arrive and clock out when we wrap up. Lunch is provided. This time is paid."
Common Mistakes
- Calling an event optional while expecting everyone to attend.
- Asking hourly employees to set up or clean up without paying them.
- Adding a business update to a "social" event.
- Not recording event time for paid events.
- Forgetting overtime after weekend or evening events.
- Ignoring travel time for off-site retreats.
Company Event Checklist
| Step | Done? |
|---|---|
| Decide whether the event is paid or truly optional and social | |
| Schedule paid events during work hours when possible | |
| Use clear invitation language | |
| Pay for setup, serving and hosting tasks | |
| Record time for paid events | |
| Check overtime and travel time | |
| Keep optional events free of business |
Examples
Example 1: The After-Hours Holiday Party
A small restaurant holds its holiday party on a Monday night when it's closed. The invitation says attendance is optional, no business is discussed and nobody tracks who comes. A paid caterer handles food and cleanup. Under the four-part test, the party is generally not work time for hourly employees.
Example 2: The Party With a Speech and Awards
An office holds a holiday party during the last two hours of the workday. The owner gives a year-in-review presentation and announces next year's goals. Because it's during work hours and includes job-related content, hourly employees are paid for the time.
Example 3: The Planning Retreat
A 20-person service company holds a one-day planning retreat at a local event space on a Friday. Hourly team leads attend sessions from 9 a.m. to 4 p.m., with a working lunch. They clock in on arrival and out at the end, and the time counts toward weekly overtime. Two leads who also worked 36 hours earlier in the week receive overtime pay for the hours over 40.
Example 4: The Optional Bowling Night
A manager organizes an optional bowling night after work. The owner later mentions in reviews that some employees "weren't team players" because they didn't attend. That comment can make attendance not truly voluntary. The business decides to keep future social events strictly separate from reviews and to pay for time at any team-building event it expects people to attend.
Meals at Events
Meals at events can be tricky. The Department of Labor says bona fide meal periods generally need not be paid, but the employee must be completely relieved from duty for the purpose of eating regular meals. If business is discussed over lunch at a retreat or training, employees aren't relieved from duty, so treat that time as work time.
Remote and Hybrid Teams
Virtual events follow the same principles. A required video all-hands, a virtual training or an online team-building game during work hours is work time for hourly employees. An optional, purely social virtual happy hour after hours generally isn't, as long as it meets the four-part test. Make sure remote employees know how to record time for paid virtual events.
Questions Employees Often Ask
"Do I have to go to the holiday party?" If it's described as optional, no, and not going won't affect your job.
"Will I be paid for the team outing?" If it's during work hours, required or job-related, yes. Your invitation should say.
"I'm helping set up the party. Do I clock in?" Yes. Setup and cleanup are work.
Making Events Inclusive
Whether events are paid or not, plan them so everyone can participate. Consider schedules, family responsibilities, religious observances, dietary needs and accessibility. Rotate times so the same people aren't always left out, and make sure social events don't become the only way to build relationships with leaders.
Budgeting for Paid Events
When an event is paid time, include labor in the budget, not just food and venue. For example, a three-hour paid team event for 15 hourly employees averaging $20 an hour costs about $900 in wages, plus any overtime. Knowing the full cost helps you choose the right format and timing.
Writing a Company Events Policy
A short events policy helps managers plan consistently:
Company Events Policy
Paid events: Meetings, trainings, planning sessions, team-building activities and any event during scheduled work hours are paid time for hourly employees. Please clock in and out.
Optional social events: Some events, like after-hours holiday parties, are purely social and optional. Attendance won't affect your job, and no work will be discussed or assigned.
Event work: If you're asked to help set up, serve, host or clean up, that time is paid.
Travel: Travel to off-site events may be paid, depending on timing and distance. Your manager will explain.
Questions: If you're not sure whether an event is paid, ask [contact].
Have an employment attorney review the policy before using it.
Checklist for Planning a Truly Optional Social Event
- Outside scheduled work hours.
- Invitation clearly says it's optional and won't affect anyone's job.
- No presentations, training, awards tied to performance or business discussion.
- No attendance tracking.
- Setup, serving and cleanup handled by paid staff or vendors.
- Managers trained not to pressure anyone or comment on who attended.
If you can't check every box, plan the event as paid time.
Travel to Off-Site Events
When events are held away from the usual workplace, travel can add paid time. Driving from the office to an event during the workday is generally work time, and the Department of Labor says travel from job site to job site during the workday must be counted as hours worked. Longer trips, such as overnight retreats, follow special travel rules. Plan travel times in advance, tell employees how to record them and include them in overtime calculations. See travel time pay for hourly employees.
After the Event
Review timesheets after any paid event to make sure everyone recorded their time, including setup and cleanup crews. Ask a few employees what they enjoyed and what could be better next time. Good events, run fairly, build exactly the kind of team connection they're meant to create.
Small Business Event Tips
- Hold team-building during work hours whenever possible, so everyone can attend and pay is simple.
- Keep social events short, optional and clearly social.
- Use vendors or paid staff for setup and cleanup.
- Put paid events on the schedule like any other shift.
- Remind managers that "optional" means no pressure.
These habits make events more enjoyable and keep pay questions from spoiling the fun.
When in doubt, pay for the time. It's simpler, fairer and usually costs less than you'd expect.
Planning ahead also helps you schedule events at times that work for most of your team, so more people can attend and enjoy them.
Share the plan with managers well in advance so they can schedule coverage.
Track Event Time With Updoot
Updoot's mobile time clock lets employees clock in at off-site events, retreats and trainings, so paid time is captured accurately. The payroll report shows weekly hours and overtime, and scheduling makes it easy to put events on the calendar.
Sources
- eCFR: 29 CFR 785.27, Lectures, Meetings and Training Programs
- eCFR: 29 CFR 785.28, Involuntary Attendance
- eCFR: 29 CFR 785.29, Training Directly Related to Employee's Job
- U.S. DOL: Fact Sheet #22, Hours Worked Under the FLSA
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