Holiday Pay Laws

Holiday pay laws should be closely followed by all companies open for business on state or federal holidays. Specifically, federal law does not require employers to pay their employees additional compensation (i.e., time and a half) for working on a holiday. In fact, the Fair Labor Standards Act (FLSA) only requires employers to pay for such time worked; employers need not pay employees for holidays in which employees may not have to work. For example, if an employee has the day off on Christmas Day, which is a federal holiday, an employee is not entitled to pay for that day. However, with that being said, many employers do typically offer holidays off to all employees and pay for such time off. Employers should indicate in the employment contract which holidays employees will have off, and if employees will be paid for that time off. Further, employers should indicate if additional compensation will be provided for those working on holidays.

Overtime Pay

As previously noted, employers are not required to pay overtime for working on holidays. However, under federal law, employers must pay employees time and a half for those hours worked in excess of the normal 40-hour workweek schedule. Moreover, in some states, including California, there is a daily overtime pay required for those working more than eight hours in a day.

Exempt Employees

Exempt employees are those who receive an annual salary as opposed to an hourly rate. All exempt employees are paid for holidays when the company is closed. If such employees aren’t paid, the employer risks the status of the exempt employee being changed to non-exempt status, at which point employees can be paid overtime for the additional time worked over the ordinary 40 hours. In addition, if an exempt employee works on Christmas or any other federal holiday, he or she is not eligible for additional compensation or overtime pay.

Non-exempt Employees

Unlike exempt employees, non-exempt employees receive an hourly rate. Employers need not pay non-exempt employees additional compensation for holidays worked, although most companies will do so. Most companies will offer time and a half to non-exempt employee for working on a holiday. However, if a non-exempt employee doesn’t receive time and a half, any hours worked on top of the 40 hours will require overtime pay. Therefore, if a non-exempt employee works 45 hours in any given week, the additional five hours will require employers to pay time and a half.

Potential Requirements to Receive Holiday Pay

  • An employer may require that employees work the day before and after a holiday to receive holiday pay.
  • An employer may require employees to have worked for the company for a specific period of time before being eligible for holiday pay, i.e., one year of employment.
  • If a holiday party requires attendance, then the company must pay its employees for attending the event. If the event results in employees working over 40 hours a week, then non-exempt employees will be eligible for overtime pay.


Employers are required to provide reasonable accommodations to those wishing to take time off for religious practices. However, the exception would be if the employer can show that providing such an accommodation would create undue hardship to the company. For this reason, employers often provide a floating holiday in additional to those regularly scheduled holidays. This provides that employees can choose to take an additional day off for any reason, including a religious observance. Be mindful that most employers require the floating holiday to be taken before year-end.

Vacation Pay

Under the FLSA, employers are not required to pay employees for any time that isn’t spent working; therefore, employers need not offer vacation days. However, this may not be a good idea for employers, as most people wouldn’t want to work for a company that doesn’t provide any paid time off. This information should also be stated in the employment contract and should even be mentioned during the interview process as well as in the employee handbook.

If you need help learning more about holiday pay laws, and your rights and responsibilities as an employer or employee, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.