Paid holidays sound simple until someone has to work one. Then the questions start: Do nonexempt employees get time-and-a-half or double-time if they're scheduled? Does an exempt employee who works the holiday get anything extra, or just the holiday pay? What about employees who were already on unpaid leave? The answers depend on federal law (which has very little to say), state law (which varies), and your own policy (which is where most disputes get resolved). A clear holiday policy resolves those questions before they become grievances.
What Holidays Most US Employers Offer The six nearly universal holidays are New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. A second tier adds Martin Luther King Jr. Day, Presidents' Day, the Friday after Thanksgiving, and New Year's Eve at many employers. Juneteenth has been rapidly added since 2021 after becoming a federal holiday.
A third tier includes Veterans Day, Columbus Day or Indigenous Peoples' Day, and religious observances like Good Friday. Some employers also offer floating holidays to accommodate religious diversity or employee preference.
How Holiday Pay Works for Different Employee Types Exempt employees typically receive their normal weekly salary regardless of whether a holiday falls in the week. Nonexempt hourly employees receive holiday pay only if the company policy provides it, usually 8 hours of regular pay.
If a nonexempt employee works on a holiday, the federal rule is just their regular rate for the hours worked. Many companies choose to pay a premium (1.5 or 2 times regular rate) to incentivize coverage. That premium is a policy choice, not a legal requirement, unless a union contract or state rule says otherwise.
Does Holiday Pay Count Toward Overtime? Under the federal FLSA, holiday pay for hours not actually worked does not count toward the 40-hour overtime threshold. Only hours physically worked count. A nonexempt employee who takes a paid holiday on Monday and works 40 hours Tuesday through Friday is not owed overtime .
Premium Pay, Religious Accommodation, and Policy Gaps Premium pay for working holidays is purely a policy decision at the federal level. Some states have modest rules, and union contracts often require premium pay. Beyond pay, employers must accommodate religious observances that don't appear on the company holiday list, typically through unpaid leave or use of PTO, unless doing so creates undue hardship under Title VII as interpreted by the 2023 Groff decision.
Policies should specify which employees are eligible (full-time only or part-time too), what counts as "worked" during a holiday week (affects eligibility in some rules), and what happens when a holiday falls on a weekend. The DOL's page on federal holidays is the baseline reference, though it doesn't bind private employers.
Designing a Paid Holidays Policy That Works Across Your Workforce Start with the six nearly universal holidays, then evaluate whether to add days that matter to your specific workforce. Juneteenth and religious accommodation are the two areas where employee expectations have shifted most quickly. Floating holidays let employees choose observances that matter to them without forcing the company to designate specific religious days.
Coordinate holiday policy with your broader benefits and leave programs. A generous holiday schedule combined with limited PTO is a very different package from a modest holiday schedule with unlimited PTO. Model both together when benchmarking against competitors, because job candidates do. Review BLS data on paid holiday benefits to benchmark the number of days you offer against the broader labor market.
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