Is Holiday Pay Mandatory? HR Expert Answer Revealed

Key Takeaways

• Understand that holiday pay is not mandated by federal law. The Fair Labor Standards Act (FLSA) doesn’t require employers to pay for holidays that are not worked.
• Explore various strategies employers use to incentivize employees, such as regular pay, time-and-a-half, or double pay for holiday work.
• Holiday pay eligibility depends on employment status (full-time vs. part-time) and specific employer policies. Employees should refer to their handbook or HR for details.

Understanding Holiday Pay Laws

Holiday pay includes employees’ pay for working on a holiday and for time off when a holiday is granted.

In the United States, no federal law obligates employers to pay their workers on holidays. The Fair Labor Standards Act (FLSA) doesn’t require payment for time not worked, such as holidays or paid time off days. 

However, many employers include holiday pay, among other benefits, to attract and retain staff members. Besides, some states or local governments may have their own regulations on holiday pay. Hence, it would be best if you were conversant with the laws in your region of operation.

Employer Policies

The employer usually sets holiday pay policies. These policies should be communicated to employees to avoid misunderstandings. The following describes some of the standard practices:

• Regular Pay: Some employers pay their employees the regular wage for holidays.

-> For example: On Thanksgiving Day, they open for a few hours, and the staff makes an average of $15/hour.

• Time-and-a-Half or Double Pay: Other employers may offer holiday work that pays a higher rate. Time-and-a-half means employees earn 1.5 times their regular pay, while double pay means employees earn twice their regular rate.

-> For example: John works in retail, where time-and-a-half is paid for working holidays. His regular pay rate is $20/hour. He works 8 hours on Labor Day and makes $30/hour ($20 x 1.5). So, instead of making his usual $160 that day, he makes $240.

• Standard Workday, Standard Pay: Some employers pay you at the same rate, whether on a holiday or a regular workday, with no extra compensation for working on holidays.

-> For example: Tom is a security guard at a 24/7 facility. His employer counts holidays as regular workdays. If he happens to work New Year’s Day or any other day, he gets paid his regular wage of $18/hour and receives nothing extra for working on a holiday.

The employer usually sets holiday pay policies.

Typical Paid Holidays

Many, but not all, employers offer paid holidays. Most paid holidays are considered non-secular observances. Typical paid holidays in the United States include:

• New Year’s Day: January 1
• Memorial Day: Last Monday in May
• Independence Day: July 4
• Labor Day: First Monday in September
• Thanksgiving Day: Fourth Thursday in November
• Christmas Day: December 25
• Martin Luther King Jr. Day: Third Monday of January
• Presidents’ Day: Third Monday in February
• Veterans Day: November 11
• Floating holidays: These don’t have set dates, as employees can typically choose when to take them, subject to their company’s policies.

Employee Eligibility

Holiday pay eligibility depends on multiple factors, one of which is employment status (full-time vs. part-time), and the other is the specific policies an employer has in place. Employees must understand their employer’s holiday pay policy. You can find this information in an employee handbook or ask about it to the HR department.

Is Holiday Pay Mandatory?

In the United States, it is a general rule that you don’t have to pay anyone an extra day’s wage just because it was a holiday or paid vacation. The Fair Labor Standards Act doesn’t require employers to pay their workers holiday pay. Therefore, whether to give employees holiday pay is often left to employers, workers, or their representatives.

However, some exceptions exist:

• Most feds get paid leave on Federal holidays as part of their benefits.
• Certain employers in Rhode Island and Massachusetts are required by specific labor laws to provide holiday pay.
• Many private employers offer paid holiday time to attract and retain employees, although no federal law requires private employers to provide paid vacation time.

What holidays do you get paid time and a half

What Happens If The Holiday Falls on a Weekend?

It’s important to note that while these are the official dates, some businesses may still have their holidays on other days, especially when a holiday falls on a weekend. 

For example, if Christmas Day (December 25) happens to be on Saturday, most business establishments could observe the same on Friday, December 24, or if it is on Sunday, they might observe it on Monday, December 26.

Massachusetts “Blue Laws” in 2024

Massachusetts “Blue Laws” control the operation of certain businesses on Sundays and holidays. Here are some highlights of these laws in 2024:

Overview of Massachusetts Blue Laws

• Sundays: Retail businesses can open without a permit. Other categories of business may have different restrictions.
• Holidays: There are limitations on operating businesses on specific holidays. For example, Columbus Day, Veterans Day, Thanksgiving, and Christmas require permits.

Key Holidays and Requirements

• Christmas Day: Businesses generally need a permit to operate.
• Thanksgiving Day: Similar to Christmas, a permit is required.
• Columbus Day (before noon): Permits are necessary for operation.
• Veterans Day (before 1:00 p.m.): Permits are also required.

Premium Pay

Effective January 1, 2023, the premium pay requirement was eliminated on Sundays and certain holidays. 

Yet, retail employers must pay their hourly employees at least 1.5 times their regular pay rate for any hours worked over 40 a week. This includes hours worked on Sundays and holidays.

Furthermore, restaurants, pharmacies, and hotels are exempt from these restrictions. They can operate on Sundays and holidays even without a permit. You may also contact the Massachusetts Department of Labor Standards or the Alcoholic Beverages Control Commission.

How To Manage Holiday Pay At Your Company

Here are typical steps to manage holidays at your company:

1. Define paid holidays

Make an official paid holiday list for your company. A standard list includes federal holidays like Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas. 

You can add other holidays to the list based on your company culture, what others in your industry do, or where your employees come from.

2. Establish eligibility criteria

Decide who is eligible for holiday pay. This can be based on employment status (full-time vs. part-time), length of service, or another criterion. 

For example, you might say that full-time employees are eligible immediately, and part-time employees are eligible if they’ve been working for 90 days.

3. Set pay rates

Decide if and how much you will pay employees for holidays. Many employers pay a full day’s wage. Still, some employers also sweeten the pot to create incentives to work by offering holiday pay at time-and-a-half, or some other percentage above their regular salary, to employees who work on a holiday. 

If employees work on a holiday, consider whether you will pay for the holiday in addition to their regular wages.

4. Create a comprehensive policy

Business owners should develop a comprehensive policy on holiday pay and an employee handbook. This policy should discuss the prerequisites for receiving holiday pay, how much employees should get paid during their holidays, how to calculate holiday pay for different categories of employees (salaried vs. hourly), and any other issues. 

5. Comply with legal requirements

Make sure your holiday pay policy follows all applicable laws and regulations. The FLSA doesn’t mandate payment for time that has not worked, such as holidays. However, there may be state or local requirements that you need to know about. 

6. Handle special situations

Lastly, you’ll need to develop policies around how employees schedule time off for holidays and how far in advance they need to notify you of their request. Determine if you’ll handle all holiday scheduling on a first-come, first-served basis.

Additionally, you should consider what happens when a holiday falls on an employee’s regular day off.