Table of Contents

Table of Contents

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Holiday Pay! What is it? How does it work? Do you have to offer it?

What Is Holiday Pay?

Holiday pay can be classified as many things: a gift, an allowance, paid time off. But no matter how you view it, at the core, holiday pay is compensation for working or not working on what your company designates as a “holiday” and is usually part of your total rewards program.

Is Holiday Pay Required by Law?

Anytime you wonder if something is required by law, you want to go check your state laws to see if there are any corresponding federal laws. In the case of holiday pay, that’s the FLSA or Fair Labor Standards Act. According to the Department of Labor (DOL), the FLSA does not require employers to offer holiday pay or pay for any time that they do not work.

Some states have laws restricting certain types of businesses from being open on holidays, however, this doesn’t change that the employer doesn’t have to pay employees on those days. The only exception to this is the salaried exempt employee.

There are also exceptions if you have a government contract. If so, you’ll want to discuss any requirements with an attorney. Union contracts may also have a provision covering holiday pay.

This US law is different from the European Union. In the EU, a law gives all employees a minimum number of paid days off for national holidays. If your business has locations in other states or countries, be sure to check their laws. When in doubt, contact an attorney to double-check.

Why Should Companies Provide Holiday Pay for Employees?

Employees Volunteer for Holidays

Last second call-offs from employees over a holiday weekend puts extra strain on the staff. Offering holiday pay for these days, such as time and a half for hours worked on the actual holiday, gives employees an incentive to come to work.

Helps Attract Talent

Recruiting is a constant challenge. Having holiday pay as part of your total rewards can give your company that competitive edge. It has become an expectation to offer holiday pay, so without it you could lose key applicants.

Improves Employee Morale

Even though we see more employees opt to work a holiday to take advantage of holiday pay, employees know they could take that time off to be with their families. Mental health is a huge issue in the workplace and adequate family time is very important for creating a happy, healthy workforce. Offering holiday pay allows employees that time without worrying about losing their pay.

Who Should be Eligible for Holiday Pay

Full-Time Employees

If your organization offers holiday pay to one full-time employee, they must offer it to all full-time employees. This needs to be specified in your company policy and given to employees at the time of hire.

Regularly Scheduled Employees

These are employees who are working regular hours and scheduled in advance. On-call and intermittent employees and consultants don’t count here.

Unions

If the union contract has a provision for holiday pay, it must be honored.

What are Common Paid Holidays?

Choosing what holidays to observe is a decision made by the organization. Federal contractors or government organizations observe all national holidays, but non-government organizations can choose. Most companies consider including designated national holidays.

In Canada, there are 5 National Holidays with 6 more for Federal Contractors. In addition, each of the provinces has its own observed holidays and many businesses are closed.

In the United States, national holidays are:

  • New Years Day
  • Memorial Day
  • Independence Day
  • Labor Day
  • Thanksgiving Day
  • Christmas Day

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Questions You’ve Asked Us About Holiday Pay

No. Holiday pay isn’t a requirement. If you offer it to a full-time employee, you have to offer it to all full-time employees. However, paying holiday pay to seasonal and part-time employees is at the discretion of the organization. Just remember what you do for one, you do for all.
No. The company can decide what holidays they will observe.There are no laws requiring employers to recognize religious holidays. If the employee celebrates a different holiday, they can always request the time off. Be careful to handle these requests with care. If you give holiday pay to one employee for their specific holiday, you must treat all your employees the same. Use discretion and check to make sure a holiday is a bonafide religious holiday to guard against employees abusing the system.
No. The only requirement by law referring to holiday pay is that hours worked be paid to employees at their regular rate. The company/organization can choose to pay more if the employee works on a holiday, the usual being time and a half the regular rate. This may be different for unions if the contract requires double time.
It depends. Paid time off isn’t calculated into overtime, but sometimes state laws will go into effect. Some states, like California, have a daily overtime that must be calculated. Check your state’s laws. Generally speaking, holiday pay is not considered compensation for working so it would not be included in the calculation for overtime.
If a holiday lands on a Saturday or Sunday, most employers will have an observed holiday. This is usually the Friday before if the holiday lands on a Saturday or on the following Monday if the holiday is on a Sunday.

Heather is a driven and experienced human resource professional with management experience in transportation, customer service, and human resources. Heather brings strengths in employment law and compliance, public and employee relations, and documentation management. Heather currently is the Human Resource Manager for SP Plus at the Salt Lake City International Airport. Prior to coming to SP Plus, Heather was an HR department of one, overseeing over 400 employees across 3 states. In this role, she developed her company’s ADA policy and helped them navigate the challenges of the pandemic and the FFCRA laws. Heather currently sits on the board of Directors for the Utah State Society of Human Resource Management (SHRM) chapter and holds dual memberships for the state and national levels.

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