Key Takeaways

  • Holiday pay laws vary by federal and state regulations, with federal law not requiring additional compensation for holiday work.
  • The Fair Labor Standards Act (FLSA) mandates pay only for hours worked, not for holidays when employees are off.
  • Many employers voluntarily offer paid holidays or premium pay to enhance employee satisfaction.
  • Federal holidays include 11 recognized days, but private employers are not obligated to provide time off or holiday pay.
  • State-specific laws may require time and a half or allow employees to refuse holiday work without penalties.
  • Exempt employees receive regular pay on holidays, while non-exempt employees are typically eligible for overtime for hours exceeding 40 in a week.
  • Employers may require specific conditions, such as working before and after a holiday, for employees to qualify for holiday pay.
  • Overtime laws apply when total weekly hours exceed 40, regardless of holiday work.
  • Post a job on UpCounsel to speak with an employment lawyer in your state for guidance unique to your case.

All companies open for business on state or federal holidays should closely follow holiday pay laws. 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, a federal holiday, an employee is not entitled to pay for that day. 

However, with that being said, many employers typically offer all employees holidays 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.

The following article will answer more of your questions on the topic of holiday pay laws to help you comply with state and federal regulations.

What Are Holiday Pay Laws?

Holiday pay is the compensation that employers may offer employees for holidays, regardless of whether they work on such days. This concept may include payment for time off or additional pay for hours worked during a holiday.

The Fair Labor Standards Act (FLSA), which oversees wage and hour regulations under federal law, does not compel employers to pay employees for holidays or to provide premium pay (e.g., time and a half) for working on holidays. 

Instead, holiday pay is typically established by employment agreements or corporate policy.

One prevalent misperception is that employers must provide time and a half for holiday work under federal law. This is not the case unless the employee's total weekly hours work surpass 40 hours, triggering overtime requirements.

Federal Holiday Pay: What Employers Need to Know

The United States recognizes 11 federal holidays:

  • New Year’s Day: January 1
  • Martin Luther King’s Birthday: 3rd Monday in January
  • Washington’s Birthday: 3rd Monday in February
  • Memorial Day: The last Monday in May
  • Juneteenth National Independence Day: June 19
  • Independence Day: July 4
  • Labor Day 1st Monday in September
  • Columbus Day: 2nd Monday in October
  • Veterans’ Day: November 11
  • Thanksgiving Day: 4th Thursday in November
  • Christmas Day: December 25

While federal holidays are generally recognized, private employers are not legally compelled to provide their employees with paid time off on certain days. Holiday pay and time off depend on the parameters stated in employment contracts or corporate regulations.

That being said, employers might increase employee happiness and morale by providing paid holidays or extra compensation for holiday work, so it is often a worthwhile step. 

Include explicit terminology about holiday pay in your employee handbooks to reduce confusion and potential disputes.

State-Specific Holiday Pay Requirements

Some states have unique holiday pay laws that go beyond federal requirements. For example:

  • Rhode Island: Requires employers to pay time and a half for employees working on Sundays and certain holidays, such as Thanksgiving and Christmas.
  • Massachusetts: Enforces “Blue Laws” that require premium pay for retail employees working on Sundays or holidays. These laws, enforced by the Attorney General’s office, also give retail employees the right to refuse work on designated holidays without facing penalties. Employers in Massachusetts must also pay employees 1.5 times their regular pay rate for working on specific holidays, including New Year’s Day, Labor Day, and Memorial Day.

These state-level laws, often called “Blue Laws,” aim to provide fair compensation for employees working during traditionally recognized rest days or holidays. 

Employers operating in multiple states should be familiar with these local regulations to ensure compliance.

Exempt vs. Non-Exempt Employees

Next, we will look at the differences between exempt and non-exempt employees in terms of holiday pay.

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 this point, employees can be paid overtime for the additional time worked over the ordinary 40 hours. 

Further, if an exempt employee works on Christmas or any other federal holiday, they are 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 employees 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 a week, the additional five hours will require employers to pay time and a half. 

Overtime Pay and Holiday Work

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, daily overtime pay is required for those working more than eight hours a day.

Employer Best Practices for Holiday Pay Policies

Establishing effective holiday pay policies can help employers maintain compliance, improve employee satisfaction, and minimize disputes. Clear communication and inclusive practices ensure employees understand their rights and benefits.

1. Detailed Explanation in Employee Handbooks 

Clearly outline holiday pay policies in your employee handbook, including whether employees receive paid holidays, additional compensation for holiday work, or floating holidays. 

Specific language can prevent misunderstandings and provide a reference point for both employers and employees.

2. Offer Floating Holidays 

Providing floating holidays allows employees to take paid time off for holidays not observed by the company or for religious or personal reasons. 

This approach promotes inclusivity and demonstrates respect for diverse traditions and needs, which can enhance overall workplace morale. 

3. Comply with Religious Accommodation Laws 

Employers must provide reasonable accommodations to those wishing to take time off for religious practices. However, the exception would be if the employer could show that providing such an accommodation would create undue hardship for the company. 

For this reason, employers often provide a floating holiday in addition to those regularly scheduled holidays. 

Employees can take an additional day off for any reason, including a religious observance. Be mindful that most employers require the floating holiday before year-end.

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 before being eligible for holiday pay, i.e., one year of employment.
  • If a holiday party requires attendance, the company must pay its employees to attend the event. If the event results in employees working over 40 hours a week, then non-exempt employees will be eligible for overtime pay.

FAQs About Holiday Pay

Is holiday pay mandatory? 

No, under federal law, holiday pay is not mandatory. However, employers may offer it as part of their company policies.

Do employers have to offer time and a half on holidays? 

No, unless the employee’s total hours worked for the week exceed 40 hours, triggering overtime pay requirements. Some states, like Rhode Island and Massachusetts, may mandate premium pay for holiday work.

How does holiday pay affect overtime calculations? 

Holiday pay for hours not worked does not count toward the 40-hour threshold for overtime. However, hours worked during a holiday do count and may result in overtime pay if the total exceeds 40 hours in a week.

Final Thoughts on Holiday Pay Laws

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 needs on UpCounsel’s marketplace. 

UpCounsel accepts only the top 5% of lawyers on 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.