Holiday pay is one of the most misunderstood areas of employment law. Most employers provide some form of holiday pay, but few are legally required to. The rules vary by state, employee classification, and company policy — and the interaction between holiday pay and overtime catches many employers off guard.

Here is what you need to know to get holiday pay right.

Key Takeaways

Federal law does not require employers to provide holiday pay or premium pay for working on holidays
Most employers offer 6-10 paid holidays as a benefit, and once established, the policy becomes a contractual obligation
Holiday hours not actually worked do not count toward the 40-hour FLSA overtime threshold unless your policy says otherwise
State laws vary — Massachusetts and Rhode Island require premium pay for retail holiday work
For distributed teams, holiday policies must account for local public holidays in each country

Is holiday pay required by law?

Federal law: no requirement

This surprises most people. The Fair Labor Standards Act (FLSA) does not require employers to pay premium rates for work on holidays, nor does it require employers to give employees holidays off. Under federal law, holidays are treated like any other workday.

The FLSA requires only that non-exempt employees be paid for all hours worked. If an employee works on Christmas Day, they are owed their regular hourly rate — not time-and-a-half, not double-time, just their regular rate. Any premium pay for holiday work is entirely voluntary on the employer's part.

State laws that require holiday pay

A small number of states have laws that affect holiday pay:

Massachusetts requires premium pay (1.5x) for retail employees who work on certain holidays (Thanksgiving, Christmas). The state has progressively reduced its "blue laws" but some protections remain.
Rhode Island requires time-and-a-half for work on Sundays and holidays in retail and certain other sectors.

Most other states follow the federal rule: no mandatory holiday premium pay.

Holiday pay as employer policy

In practice, most employers provide paid holidays as a benefit — not because the law requires it, but because the labor market expects it. According to the Bureau of Labor Statistics, approximately 79% of private-sector workers receive paid holidays.

The typical private employer offers 6-10 paid holidays per year. The most common: Thanksgiving, Christmas Day, New Year's Day, Independence Day, Labor Day, and Memorial Day.

Once established, your holiday pay policy becomes a contractual obligation. You cannot unilaterally reduce paid holidays without proper notice and, in some cases, employee consent.

Important

Once you establish a holiday pay policy, it becomes a contractual obligation. You cannot unilaterally reduce paid holidays without proper notice — and in some cases, employee consent is required.

Federal holidays in the United States

There are 11 federal holidays:

Holiday	2026 Date	2027 Date
New Year's Day	January 1	January 1
Martin Luther King Jr. Day	January 19	January 18
Presidents' Day	February 16	February 15
Memorial Day	May 25	May 31
Juneteenth	June 19	June 18 (observed)
Independence Day	July 4 (observed July 3)	July 4 (observed July 5)
Labor Day	September 7	September 6
Columbus Day / Indigenous Peoples' Day	October 12	October 11
Veterans Day	November 11	November 11
Thanksgiving	November 26	November 25
Christmas Day	December 25	December 25

Federal employees are entitled to these holidays off with pay. Private-sector employers are not required to observe any of them, but most observe at least 6.

For a complete reference including cultural and informal holidays, see our US holidays guide.

How holiday pay works

For hourly (non-exempt) employees

Holiday pay for hourly employees depends entirely on employer policy. Common arrangements:

Paid day off. The employee does not work and receives pay for their regularly scheduled hours at their normal rate. This is the most common arrangement.

Premium pay for working. Employees who work on the holiday receive a premium — typically time-and-a-half (1.5x) or double-time (2x). This is voluntary unless your state requires it.

Holiday pay plus worked hours. Some employers pay holiday pay (8 hours at regular rate) AND pay for hours actually worked. An employee who works an 8-hour shift on the holiday receives 16 hours of pay.

No premium. The employee works the holiday at their regular rate. Legal under federal law, but uncommon for major holidays.

For salaried (exempt) employees

Exempt employees receive their full salary regardless of the number of days or hours they work in a week. If an exempt employee works on a holiday:

They receive their normal salary — no overtime, no premium pay (overtime rules do not apply to exempt employees)
Many employers offer comp time or a floating holiday as an alternative
You cannot dock an exempt employee's pay for a holiday without risking their exempt status

For part-time employees

Part-time holiday pay varies widely by employer:

Some employers provide prorated holiday pay (e.g., 4 hours of holiday pay for an employee who normally works 20 hours/week)
Others exclude part-time employees from paid holidays entirely
Best practice: define eligibility clearly in your policy to avoid disputes

How to calculate holiday pay

Standard holiday pay

For employees who take the holiday off with pay:

Holiday pay = Hourly rate x Regularly scheduled hours for that day

Example: An employee earning $20/hour who normally works 8 hours on the holiday's weekday receives $160 in holiday pay.

Time-and-a-half

For employees working on the holiday at premium rate:

Holiday premium = Hourly rate x 1.5 x Hours worked

Example: $20/hour x 1.5 x 8 hours = $240

Double-time

Double-time pay = Hourly rate x 2 x Hours worked

Example: $20/hour x 2 x 8 hours = $320

Holiday pay for variable-hour employees

For employees whose hours vary week to week, base holiday pay on the average hours worked over a lookback period — typically the previous 13 or 26 weeks.

Example: An employee who averaged 6 hours on the holiday's weekday over the past 13 weeks receives 6 hours of holiday pay at their regular rate.

Track Holiday Hours Accurately

HiveDesk tracks time, manages leave, and generates timesheets that account for holiday hours — so payroll calculations are accurate every pay period.

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Holiday pay and overtime

This is where most employers make mistakes.

Do holiday hours count toward overtime?

Under the FLSA, no — with an important nuance.

The FLSA requires overtime (1.5x) for hours actually worked over 40 in a workweek. The key word is "worked." If an employee takes a paid holiday (does not come to work) and receives 8 hours of holiday pay, those 8 hours were not "worked." They do not count toward the 40-hour overtime threshold.

Example:

Employee works Monday through Thursday (32 hours)
Friday is a paid holiday (8 hours of holiday pay, no work performed)
Total compensation: 40 hours of pay
Overtime hours: zero (only 32 hours were actually worked)

However, if the employee works on the holiday AND works the rest of the week:

Employee works Monday through Thursday (32 hours)
Employee works Friday (the holiday) for 8 hours
Total hours actually worked: 40 hours
Overtime hours: zero (exactly 40)
The employee also receives whatever holiday premium the policy provides

Important exception: Your company policy or state law may treat holiday hours as "hours worked" for overtime purposes. If your policy says "holiday hours count toward the 40-hour overtime threshold," then they do — regardless of the FLSA default. Check your policy and your state's rules.

Key Takeaway

Under the FLSA, paid holiday hours where no work is performed do not count toward the 40-hour overtime threshold. But your own company policy can override this default — check your policy language carefully.

State exceptions

California calculates overtime based on hours worked per day (over 8 hours) and per week (over 40 hours). Only hours actually worked count — paid but unworked holiday hours do not.
Some collective bargaining agreements treat holiday hours as "hours worked" for overtime calculation, even if the employee did not work the holiday.

Holiday pay best practices for employers

What to include in your policy

Which holidays are observed (list them specifically)
Eligibility requirements (full-time only? tenure requirement?)
How pay is calculated for employees who work on the holiday
How to handle holidays falling on weekends (observed on Friday or Monday?)
Policy for holidays on scheduled days off (floating holiday or extra day?)
Process for requesting to work or not work holidays
Whether holiday hours count toward overtime

Handling holiday pay for remote and distributed teams

If your team spans multiple countries, holiday pay becomes significantly more complex. Different countries observe different holidays, and local labor laws dictate minimum requirements.

A US employee expects Thanksgiving off; a UK employee expects Boxing Day
The Philippines has more public holidays (around 18) than the US (11)
India has a mix of national, state, and religious holidays that varies by location

For distributed teams, many employers adopt a policy of local public holidays plus a set of company-wide holidays, with a budget of floating holidays employees can use for cultural or religious observances.

See our country-specific compliance guides for holiday requirements in 45 countries.

Religious and floating holidays

Title VII of the Civil Rights Act requires employers to reasonably accommodate employees' religious practices, which may include observance of religious holidays. Best practices:

Offer 2-3 floating holidays per year that employees can use for any purpose
Create a process for requesting religious holiday accommodations
Do not require employees to disclose the specific religious reason for a holiday request

Tracking holiday pay and time off

Accurate tracking of holiday pay requires knowing:

Who is eligible for holiday pay
Who worked on the holiday and for how many hours
Whether holiday hours should count toward overtime calculations
How floating holidays are accrued and used

HiveDesk's time tracking and leave management features handle holiday pay tracking alongside regular hours — giving payroll teams the data they need for accurate holiday pay calculations.

Frequently asked questions

Is my employer required to give holiday pay?

Under federal law, no. The FLSA does not require holiday pay, premium pay for working on holidays, or even holidays off. However, most employers offer paid holidays as a standard benefit, and some states (Massachusetts, Rhode Island) require premium pay for holiday work in certain industries.

What is time and a half for $15/hour on a holiday?

$15 x 1.5 = $22.50 per hour. For an 8-hour shift worked on a holiday at time-and-a-half, total pay would be $180.

Do salaried employees get extra pay for working holidays?

Typically no. Exempt (salaried) employees receive their full salary regardless of holidays. Employers cannot be required to pay overtime or premium rates to exempt employees. However, many employers offer comp time, a floating holiday, or a bonus for exempt employees who work on major holidays.

Can my employer make me work on a holiday?

In most states, yes. There is no federal law preventing an employer from requiring employees to work on holidays. Exceptions exist for certain retail workers in Massachusetts and Rhode Island. Religious accommodation requirements under Title VII may also apply.

What happens if a holiday falls on my day off?

Company policy determines this. Most employers either designate the nearest workday as the observed holiday (e.g., if July 4 is a Saturday, Friday July 3 is observed) or provide a floating holiday to use at the employee's discretion.

Holiday pay is one area where getting the policy right upfront prevents payroll headaches throughout the year. Define your terms clearly, communicate them in writing, and make sure your time tracking system can handle the complexity.

HiveDesk tracks time, manages leave, and generates timesheets that account for holiday hours — all for $5/user/month. Start a 14-day free trial to see how it works.

Holiday Pay: Laws, Calculations, and Employer Requirements