Holiday Pay for Employees

Psst… check out this post, Exempt vs. Nonexempt: What’s the Big Deal?

Answers to 7 Holiday Pay Questions

Do you have to provide paid holidays? What about for new employees? And do you have to pay overtime to employees who have to work a holiday? We’re officially heading into the holiday season with Thanksgiving coming up next week and Christmas and the New Year just around the corner. If you are like most employers, you may be dealing with holiday pay issues. To help you out, here are the answers to seven common holiday pay questions.

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1. Do we have to provide paid holidays?

Absent a collective bargaining agreement or other contract providing paid holidays, federal law does not require you to pay nonexempt employees for holidays that they do not work. Most organizations offer a limited number of paid holidays to create employee goodwill. According to the Society for Human Resource Management 2011 Benefits Survey, 97% of responding employers provide paid holidays to their employees.

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Note, however, that if you do not provide paid days off for holidays, you should pay exempt employees for any holidays that your organization is closed. (As a reminder, the Department of Labor (DOL) regulations implementing the Fair Labor Standards Act (FLSA) provide that the following categories of employees are exempt from the overtime and minimum wage requirements of the FLSA: (1) bona fide administrative, executive, or professional employees; (2) workers employed in outside sales; (3) highly skilled computer-related employees; and (4) certain “highly-compensated” employees.)

Although the DOL regulations implementing the FLSA do not specifically address unpaid holidays, they do provide that an employee will not be considered paid “on a salary basis” if deductions are made “for absences occasioned by the employer or by the operating requirements of the business.” Unpaid holidays generally are considered the type of absence “occasioned by the employer.” According to a DOL Wage & Hour Opinion Letter dated 5/27/99, the DOL indicated that an employee will not be considered to be paid on a salary basis if deductions from the employee’s predetermined compensation are made for absences occasioned by the employer, such as being closed on certain holidays, or the operating requirements of the business. Further, the regulations recognize only a limited number of instances when an employer may make deductions (or “dock”) for absences of a full day or more without jeopardizing the exemption and thus incurring overtime liability. But, holidays do not fall under any of those exceptions.

2. Can we require employees to complete an introductory period before becoming eligible for holiday pay?

You most likely can exclude new nonexempt employees from holiday pay. If there is no collective bargaining agreement or other contract specifying that new employees are eligible for holiday pay, then it is up to your organization’s policy. Many employers exclude new employees from certain benefits granted to longer-term employees until completion of the introductory period.

However, new exempt employees should not be covered by this policy and should receive pay for holidays. As explained in # 1, above, if you do not pay exempt employees, new or old, for holidays they do not work, you may jeopardize their exempt status.

3. Can we require employees to work on holidays?

Since paid holidays are a discretionary benefit, you may require employees to work holidays according to the operating needs of the organization (and assuming no collective bargaining agreement or other contract prohibits this work). We recommend that employers’ holiday policies should include language that indicates employees may be required to work on holidays. For example, we use language like: “The Company may schedule work on an observed holiday as it considers necessary. Normally, work on an observed holiday will be paid as if the day were a regularly scheduled work day. Employees will be given the option of receiving additional pay for the day or a “floating” holiday that may be taken, with the prior approval of their supervisor, at another time during the year.”

Note that you generally are not required to pay nonexempt employees for time and one-half for holiday work unless the employee has already worked 40 hours in the week (see # 4, below) or to provide a paid floating holiday at a later point. However, the model policy provides these extra benefits in recognition of the extra burden for employees who work on holidays.

4. Do we owe nonexempt employees overtime if they work on holidays?

The FLSA requires you to pay overtime to nonexempt employees at time and one-half their regular rate of pay for all hours actually worked over 40 in a single workweek. Accordingly, you will owe nonexempt employees who work on holidays overtime only if the employees end up working more than 40 hours because they are working on the holiday.

So, for example, if an employee has worked four 10-hour days (40 hours) and then works on a designated holiday that same week, then the employee should receive overtime for all of the holiday work hours. But, if the employee works four 8-hour days (32 hours) and then works an additional eight hours on the holiday, for a total of 40 hours worked in the week, then that employee is not entitled to overtime for the holiday work hours. (Note, however, that a limited number of states, such as Rhode Island, require payment of at least time and one-half for employees who work on certain holidays, so be sure to check state law, too.)

As an aside, if you voluntarily pay a premium of time and one-half (the equivalent of overtime) for work on a holiday, the FLSA regulations generally allow you to credit this extra compensation towards any overtime that might actually be earned in the same week.

5. If an employee works 40 hours in a week and then takes a paid holiday, do we owe the employee overtime?

No. As discussed in # 4, above, nonexempt employees must be paid overtime only for all hours actually worked over 40 in a single workweek. Thus, in calculating actual working hours for a nonexempt employee, you do not have to count any paid time off in the overtime calculation if the employee did not perform any work during the time off.

So, even if a nonexempt employee works a full 40-hour workweek and also takes a day of paid holiday and is paid for 48 hours that week, the employee is not entitled to overtime pay since he did not actually work more than 40 hours in the workweek.

6. What if an employee is on FMLA leave when a holiday occurs? Should they receive holiday pay?

The answer depends on your policy. You generally do not have to pay an employee for holidays that occur while the employee is out on unpaid FMLA leave if it is not the employer’s policy to provide this benefit during other types of unpaid leave. Similarly, if an employee’s work schedule is reduced for intermittent FMLA leave, you may reduce proportionately the employee’s benefits, such as holiday pay, if the employer’s normal practice is to base this benefit on the number of hours an employee works. However, you may not eliminate the full-time employee’s benefits because the employee is working a part-time schedule if part-time employees normally are not eligible for these benefits.

7. How do we pay nonexempt employees who work a compressed workweek, working four days a week, ten hours a day? Should these employees receive holiday pay if the holiday falls on a day that they are not scheduled to work?

Whether the nonexempt employees working compressed workweeks qualify for holiday pay depends on the terms of your holiday policy and how it has been implemented. Employers using compressed schedules (such as employees working four days/ten hours a day) generally take three basic approaches to eligibility for holiday pay.

Some employers pay only for holidays occurring on the employee’s regularly scheduled work day. Another more common approach is to allow compressed workweek employees to take off a day on which they would otherwise be scheduled to work. For example, if the employees normally work four days, they work only three days during weeks with holidays. Still other employers prefer to have compressed workweek employees on the job at least four days a week and pay for the holiday even if the employee is not scheduled otherwise to work that day, giving the employees an extra day of pay. This last practice, however, may lower the morale of employees who work a regular schedule and thus receive less pay for the holiday week.


Robin Thomas, J.D.
Personnel Policy Service, Inc.

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28 Comments on "Holiday Pay for Employees"

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Kevin Robinson

Am i entitled to 20 or 28 days holiday as a salary worker


Can a company pay holiday pay to employees who are off on the holiday and then just pay time and a half to the ones who work the holiday?


Say i work on a holiday , and that same day i worlk 3 hours overtime. I do get holiday pay, but how is calculated for overtime?


Can I get pay for 32 hours in one day?


If I’m a salaried employee and the business is required to be closed on certain days of the year does that day closed be considered one of our required days off or is that someone with an in just practice?

Lisa R

‘I’m a 40 hr week salary employee(needless to say never been 40-hrs usually upwards of 50) my days off are Sunday & Monday- but every holiday I receive email telling me my adjusted schedule is-(this passed thanksgiving and now this week) take Sunday off but Thursday (thanksgiving & now Christmas) will be your day off instead off Monday! Is that not illegal, unless they are willing to add an extra paid day in that week? Also I’m told the same for New Years day!


Someone uses my services once a week, Mondays. most of the Federal Holidays this year falls on a Monday. Am I entitle to get pay for these holidays?


Someone uses my services once a week, Mondays. most of the Federal Holidays this year falls on a Monday. Am I entitle to get pay for these holidays?


I am a state employee, hired to work 4-10hr days (Monday-Thursday). A paid holiday falls on a monday. Can my employer change our schedule to 8 hour days (Tuesday-Friday) causing us to work on our regular scheduled day off?


I have 2 FT hourly employees. Can I pay only the manager holiday pay?
Do I have to pay the other FT hourly person also?

neik taylor

Are managers and supervisors entitled to more days off than anyone else


I started a job in May and was told that there is no holiday pay for 3 months. I am a full time, salaried employee. I was not paid for the 4th of July. According to this article, it sounds like that was illegal. Can the company make their own rules regarding deducting salary/no pay, even though they were closed for a national holiday?

belk employee

I wasn’t paid holiday pay and worked a full shift into next day for black Friday which occurred on thanksgiving day. Every but myself was paid time and a half . I recieved reg pay. Why is this

Iris Rosado

I’m a Temp who has been working at the same place for close to 2 years already. My question s are TEMPS entitled to get paid for LEAGAL HOLIDAYS? I’m so confused and it’s definitely not fair not to get paid for a legal holiday. When you obviously can’t come in if everything is closed. Please help!!!!


My company is closing for two weeks, which includes 4 paid holidays (Christmas Eve, Christmas, New Year’s Eve and New Years.) The general rule I have seen is that salary employees still get paid if work is not made available to employees (paid on a salary basis) for part of a workweek, the employer may not reduce the week’s salary. So if there are two holidays a week (for two weeks), should salary employees still get paid their regular amount? Or only paid for holidays?

Charles. Thompson

I have been employed for three year a now and my day off has been Friday and Sunday. Several holidays have fallen on my day off. What do you recommend?


I have been at my job for three months almost four now.I am full-time. 8 hrs 5 days a week. Off monday&Tuesday. I have worked Thanksgiving, black Friday, Christmas eve, Christmas, New Years eve and New years. I asked my boss today about holiday pay and was told the store did not make enough for me to receive holiday pay. Is this legal? Can they do deny me Holiday pay?


I have been at my job for three months almost four now.I am full-time. 8 hrs 5 days a week. Off monday&Tuesday. I have worked Thanksgiving, black Friday, Christmas eve, Christmas, New Years eve and New years. I asked my boss today about holiday pay and was told the store did not make enough for me to receive holiday pay. Is this legal? Can they do deny me Holiday pay?

Cassandra Allison

My company closes early on the eve of Thanksgiving, Christmas, and New Year’s. I am an hourly employee who has worked with the same company for a year now. I did not get paid for the early closings but the salary employees did. Is this legal?


I want to know if when your company paid holiday it’s consider as a regular base salary…

Angel Martin

Do I get paid holiday if I have it off. When I already worked my 40hrs

Norberto Detrick

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I am on salary do I get loading when I go on holidays


I am salary. The company I work for requires us to work 45 hrs a week. They also offer paid holidays. I am confused about this tho. I was told I only get 2 days off (as usual) which means I am still working 45 hours. Can someone explain to me how I am getting paid for a holiday if I still have to work 45 hours, please?

Linda Moore

We work twelve hour shifts but on holidays we only get paid for eight hours is that legal.

jarrod ridenour

If i work monday through friday (40 hrs) , but July 4th falls on a monday, the business is closed and its paid holiday and my boss asks me to work Saturday (5 working days) 40hrs. Do i receive the holiday as 8 extra hours or only the 5 days i worked?


I work 40 hrs a week as a contracted non-employee. Due to a holiday on 4th of july and a declared holiday on 5th of july my work week reduced to 24 hours and reduced pay. Can I ask for a holiday pay or compensation.


Our employer offers 11paid holidays per year as a benefit. They cut our hours for the week to compensate the extra 8 hours of pay. So we really aren’t getting extra pay for the holiday. So it’s not an extra benefit.