What are paid holidays?

Paid holidays are days an employer chooses to pay employees for, usually because the business is closed or the day has special significance. Federal law does not require them, so the policy decides which days, who qualifies and what happens if someone works.

In shortPaid holidays are specific dates for which employees receive pay without working, or receive extra pay if they do work. Under federal wage law, there is no requirement to pay for time not worked on holidays, and no requirement to pay a premium for working on one; holiday pay is a matter of agreement between the employer and employees. Most employers who offer paid holidays choose some or all of the federal holidays. Two federal rules affect how holiday pay is calculated for non-exempt employees. Pay for a holiday not worked is excluded from the regular rate when it is for an occasional absence and roughly equal to normal earnings, and those hours are not hours worked toward overtime. A premium for working on a holiday that is at least time and a half is excluded from the regular rate and may be credited toward overtime owed that week. A clear policy lists the holidays, eligibility (for example, part-time staff or new hires), how holiday pay is calculated and the rate for working the holiday.

Holiday pay policy choices

Paid holiday decisions
Decision Common approach
Which holidays 6 to 11 days, usually from the federal list
Who qualifies Full-time and often part-time after a waiting period
Pay for the day off Scheduled hours or a standard day at the regular rate
Working the holiday Time and a half, or another day off
Weekend holidays Observed Friday or Monday, or paid on the actual date
Attendance rule Work the scheduled day before and after, if used, applied consistently

See the holiday pay rules guide and the holiday pay calculator.

Front desk agent, Thanksgiving weekHoliday worked8 h x $27 = $216Rest of week32 h x $18 = $576$792 total; the $72 premium is creditable to overtime
A holiday premium of time and a half counts as an overtime premium.

Worked example: Thanksgiving week at a hotel

8 holiday hours, then 40 worked

A hotel gives full-time staff 8 hours of holiday pay for Thanksgiving and pays time and a half for anyone who works it. A front desk agent at $18 an hour works Thanksgiving for 8 hours and 40 hours in total that week.

For the holiday hours worked, he gets $18 x 1.5 = $27 an hour, $216 for the day, and 32 hours at $18 for the rest of the week, $576. His weekly pay is $792. Because the holiday premium is at least time and a half, the extra half-time ($72) can be credited toward any overtime owed that week, and here none is owed since he worked 40 hours.

A housekeeper who had the day off gets 8 hours of holiday pay at her regular rate. Those 8 hours do not count as hours worked, so her 36 hours of actual work that week do not trigger overtime.

Mistakes that are specific to paid holidays

Floating holidays and weekend holidays

A floating holiday is a paid day off that the employee picks, instead of a date set by the company. Many employers add one or two to the fixed list so employees can observe a religious or cultural holiday, a birthday or another day that matters to them. The policy should say when floating holidays must be used, how much notice is needed, and whether unused ones carry over.

Holidays that fall on a weekend need a rule too. In 2026, Independence Day falls on a Saturday, and in late 2026 and early 2027, Christmas Day and New Year’s Day both fall on a Friday. Many employers observe a Saturday holiday on the Friday before and a Sunday holiday on the Monday after, but this is a policy choice, so write it down.

Second example: prorated holiday pay for part-time staff

A dental office gives full-time staff 8 hours of holiday pay for each paid holiday. Its policy gives part-time staff holiday pay in proportion to their regular schedule.

A hygienist who is regularly scheduled 24 hours a week gets 8 x 24 / 40 = 4.8 hours of holiday pay for each holiday. Because July 4, 2026 is a Saturday, the office observes it on Friday, July 3, and pays the holiday hours in that week. The hours are paid but are not hours worked, so they do not count toward overtime.

Publish the holiday list with the first schedule of the yearPost next year’s paid holidays, the eligibility rules and the working-holiday rate in January. It stops the yearly questions and helps managers plan coverage early.

Questions people ask

Are paid holidays required by law?

Not under federal law. Paid holidays are a benefit set by employer policy or agreement. Check state and local rules too.

Do paid holiday hours count toward overtime?

No. Holiday pay for a day not worked is not hours worked, so it does not count toward the 40 hours unless the employer’s policy says it does.

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

No federal law requires it. Many employers choose to, and a premium of at least time and a half can be credited toward overtime owed.

Do part-time employees get paid holidays?

Only if the employer’s policy includes them. Many pay part-time staff a prorated amount.

What is a floating holiday?

A paid day off that the employee chooses, rather than a fixed date. Policies usually set notice rules and whether unused days carry over.

What happens when a paid holiday falls on a Saturday?

It depends on the policy. Many employers observe it on the Friday before, and a Sunday holiday on the Monday after.

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Disclaimer: What you read here about paid holidays is general information, not legal, payroll or tax advice, so confirm the current rule where you operate; the examples are fictional.