Short answer: federal law does not require private employers to give paid holidays or pay a premium for working on a holiday, so holiday pay is a policy decision you make and write down. Good holiday scheduling comes down to four things: a clear holiday pay policy, a fair rotation for who works each holiday, firm request deadlines, and a plan for overtime during short holiday weeks.
The stretch from Thanksgiving to New Year’s Day is the hardest scheduling period of the year for many hourly teams. Demand spikes in retail, restaurants, hospitality and healthcare, while employees want time off for family and travel. Without a plan, managers end up making last-minute calls, the same reliable people work every holiday, and overtime creeps in. This guide covers the rules, the policy choices, and a simple planning process you can reuse every year.
Is holiday pay required by law?
For private employers, the federal answer is no. The U.S. Department of Labor states that the Fair Labor Standards Act (FLSA) does not require payment for time not worked, such as vacations or holidays, federal or otherwise. Those benefits are generally a matter of agreement between the employer and the employee (or their representative).
The same goes for working on a holiday. DOL’s overtime fact sheet says the FLSA does not require overtime pay for work on Saturdays, Sundays, holidays or regular days of rest, as such. What the FLSA does require is time and one-half for non-exempt employees for hours worked over 40 in a workweek, and that rule still applies during holiday weeks.
A few things can change the picture for your business:
- State and local law. A small number of states have rules about holiday work in specific industries, and some cities have scheduling laws that affect schedule changes. See our guide to predictive scheduling laws and check your state labor department.
- Contracts and handbooks. If your handbook, offer letters or a union agreement promise holiday pay, that promise is binding on you.
- Federal contracts. Some government contracts carry their own wage and fringe benefit requirements.
Common holiday pay policies
Because holiday pay is mostly your choice, the important part is choosing one approach and applying it consistently. Here are the most common options for hourly teams.
| Policy | How it works | Good fit for |
|---|---|---|
| Paid holiday off | Eligible employees get their regular hours paid for listed holidays they do not work. | Offices, manufacturing, businesses that close on holidays |
| Holiday premium for working | Employees who work a listed holiday earn a higher rate, such as time and a half or double time. | Retail, restaurants, healthcare, hospitality |
| Floating holiday | Employees choose a day off from a set number of floating days. | Diverse teams with different holidays |
| Alternate day off | Employees who work the holiday get a paid day off later. | Small teams that cannot spare people on the day |
| No holiday pay | Holidays are paid only if worked, at the regular rate. | Allowed federally, but harder for retention |
Whatever you choose, spell out eligibility (for example, full-time only, or after 30 days of employment), whether employees must work their scheduled shifts before and after the holiday to qualify, and how part-time employees are treated.
How holiday pay interacts with overtime
Two federal regulations are worth knowing:
- Paid holidays not worked. Under 29 CFR 778.218, pay for an occasional holiday that is not worked can be excluded from the regular rate, and it cannot be credited toward overtime owed. Federal overtime is based on hours actually worked, so paid holiday hours that were not worked generally do not push someone over 40 under federal rules. Your own policy or a union contract may count them anyway.
- Holiday premiums for working. Under 29 CFR 778.203, a premium paid for working on a holiday can be excluded from the regular rate and credited toward overtime only if it is at least one and one-half times the employee’s bona fide rate for the same work on other days. A smaller premium, such as an extra $2 per hour, must be included in the regular rate.
Worked example: Maria is a non-exempt cashier. Her store closes on Thanksgiving and pays eligible staff 8 hours of holiday pay. She works 40 hours across the other days of that workweek. Under federal rules she worked 40 hours, so no overtime is required, even though she is paid for 48 hours. If she had worked 44 hours on the other days, she would be owed time and a half for 4 hours, and the holiday pay could not be used to cover it. Run your own numbers with our overtime calculator.
Build a fair holiday rotation
The fastest way to lose good employees is to let the same people cover every holiday because they never say no. A written rotation fixes that.
- List your coverage holidays. For most teams this is Thanksgiving, the day after Thanksgiving, Christmas Eve, Christmas Day, New Year’s Eve and New Year’s Day.
- Group them into tiers. Treat high-demand days (Thanksgiving, Christmas Day) as one tier and lighter days as another, so nobody gets two top-tier days in a row.
- Track who worked last year. Whoever worked Christmas last year gets first choice of time off this year.
- Let people trade. Some employees prefer to work Christmas and take New Year’s off. Allow shift swaps with manager approval so trades happen in the system, not in a group chat.
- Ask for volunteers first. Premium pay often brings enough volunteers to cover the hardest days before you assign anyone.
Set holiday request deadlines
Deadlines turn holiday planning from a scramble into a process. A simple timeline for a Thanksgiving to New Year’s season looks like this:
- Early October: publish the holiday pay policy, the coverage needs and the request deadline.
- Mid to late October: deadline for time-off requests for Thanksgiving week and the December holidays. Requests after the deadline are handled case by case.
- Two to three weeks before each holiday: post the holiday schedules, then lock them except for approved swaps.
- Holiday week: confirm call-off rules and who is on call.
Decide in advance how you will break ties when too many people ask for the same day: seniority, first come first served, or last year’s rotation. Write it in the policy so managers are not making it up as they go. Collecting employee availability early makes the whole process easier.
Holiday staffing plan template
Holiday staffing plan, Thanksgiving to New Year’s
Print or copy this table, fill in your own coverage numbers and deadlines, or download it as a CSV for a spreadsheet.
| Holiday | Date | Staff needed | Staff assigned | Pay rule | Request deadline |
|---|---|---|---|---|---|
| Thanksgiving | Thu, Nov 26, 2026 | ||||
| Day after Thanksgiving | Fri, Nov 27, 2026 | ||||
| Christmas Eve | Thu, Dec 24, 2026 | ||||
| Christmas Day | Fri, Dec 25, 2026 | ||||
| New Year’s Eve | Thu, Dec 31, 2026 | ||||
| New Year’s Day | Fri, Jan 1, 2027 |
Template only. Add or remove holidays to match your own policy.
Manage overtime during holiday weeks
Holiday weeks are short weeks for some people and long weeks for others. If the business is closed one day, the remaining days often get heavier, and the same few employees pick up extra shifts. Because overtime is calculated per workweek, and averaging hours across two weeks is not allowed under the FLSA, one busy holiday week can create overtime even if the next week is light.
- Build the schedule against hours, not just shifts. Check each person’s weekly total before you publish.
- Watch swaps and pickups. A swap that looks harmless can push someone past 40 hours. Approve swaps with the weekly total in view.
- Set alerts. Get notified when someone is close to overtime so you can adjust before the hours are worked.
- Plan for call-offs. Keep a short on-call list so you are not forced to keep one person on a double shift.
For a deeper process, see our guide to overtime planning for hourly teams and the FLSA overtime rules.
Holiday scheduling checklist
- Written holiday pay policy with eligibility rules
- List of coverage holidays and staffing needs per day
- Rotation record from last year
- Published request deadline and tie-breaking rule
- Schedules posted two to three weeks ahead
- Swap approval process
- Overtime check before publishing
- On-call list for holiday week
How EZTime helps with holiday scheduling
EZTime’s employee scheduling software lets you build holiday schedules from employee availability and time-off requests, publish them to the mobile app, and let employees trade shifts with manager approval. Labor rule alerts warn you when a schedule or a swap is heading into overtime, and the time clock records actual hours so holiday pay and overtime are calculated from real punches. Payroll-ready exports in Excel or PDF work with any payroll software. Plans start at $2 per employee per month with a 14-day trial.
This article is general information, not legal advice. Laws change; check your state labor department or an employment attorney before making decisions.
Frequently asked questions
Do employers have to pay holiday pay?
Not under federal law. The FLSA does not require private employers to pay for holidays not worked or to pay a premium for working on a holiday. Holiday pay is set by your policy, employment agreements or a union contract, and some state or local rules may apply in specific industries.
Is working on Thanksgiving or Christmas overtime?
Not by itself. Federal overtime is owed for hours worked over 40 in a workweek. Working on a holiday does not trigger overtime unless the employee goes over 40 hours that week or your policy promises a holiday premium.
Do paid holiday hours count toward overtime?
Under federal rules, overtime is based on hours actually worked, so paid holiday hours that were not worked generally do not count toward the 40-hour threshold. Some employers choose to count them, and union contracts often do.
How do I decide who works on holidays?
Use a written rotation. Ask for volunteers first, then assign remaining shifts based on who worked the same holiday last year, and allow approved shift swaps. Apply the same rule to everyone.
When should holiday time-off requests be due?
Many employers set a deadline six to eight weeks before the first holiday, for example in mid to late October for Thanksgiving through New Year’s. Choose a date that gives you time to post schedules two to three weeks ahead.
Can part-time employees get holiday pay?
Yes, if your policy includes them. Federal law does not require it either way, so define eligibility clearly, for example prorated holiday pay based on scheduled hours.