Are Employers Required to pay Holiday Pay?

The holiday season brings joy and celebration, but for employers and HR professionals, it also raises important questions about compensation. Do you have to pay employees for holidays? Is holiday pay mandatory? Is time-and-a-half required?

The answers may surprise you. Federal law doesn’t require private employers to provide holiday pay at all. However, state laws, industry practices, and company policies create a more complex environment that every employer needs to understand. This guide explains what you need to know about federal and state holiday pay laws, and offers practical guidance for managing holiday compensation at your organization.

Federal Holiday Pay Laws

Holiday pay is not mandatory under U.S. federal law. The Fair Labor Standards Act (FLSA) doesn’t require private companies to offer holiday pay—employers are only required to pay for time actually worked. If an employee takes a holiday off, payment isn’t obligatory unless specified in company policy.

That said, most private sector employers do offer paid holidays as part of their benefits package. According to the Bureau of Labor Statistics, 81% of private employees have access to paid holidays, averaging 7.6 paid holidays per year. In practice, most employers give employees the day off for major holidays or pay premium rates for working those days—it’s just not legally required.

Some companies also offer floating holidays, which employees can take at any time. This approach provides flexibility for employees to observe religious or cultural holidays meaningful to them, without requiring the employer to designate specific additional holidays. As of 2024, 41% of private employers have also added Juneteenth (June 19) as a paid company holiday.

Note: If employees are represented by a union, holiday pay provisions will be included in their collective bargaining agreement.

Federal Holidays in 2025

The federal government recognizes 11 official holidays. While these apply to federal employees with guaranteed paid time off, they serve as a reference for many private employers when designing their own holiday schedules:

• New Year’s Day – Wednesday, January 1
• Martin Luther King Jr. Day – Monday, January 20
• Presidents’ Day – Monday, February 17
• Memorial Day – Monday, May 26
• Juneteenth – Thursday, June 19
• Independence Day – Friday, July 4
• Labor Day – Monday, September 1
• Columbus Day / Indigenous Peoples’ Day – Monday, October 13
• Veterans Day – Tuesday, November 11
• Thanksgiving Day – Thursday, November 27
• Christmas Day – Thursday, December 25

Most common private sector holidays: While private employers aren’t legally required to observe any holidays, six are included by approximately 97% of companies that offer paid holiday benefits: New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas. These form the core of most private sector holiday schedules.

Holiday observance dates: When a federal holiday falls on Saturday, it’s typically observed on the preceding Friday. When it falls on Sunday, it’s observed the following Monday. Private employers can choose whether to follow this practice or observe holidays on their actual calendar dates.

Holiday Pay Rules: Exempt vs. Non-Exempt Employees

Understanding the distinction between exempt and non-exempt employees is crucial when your business closes for holidays.

Non-Exempt (Hourly) Employees

If your business closes for a holiday and non-exempt employees don’t work, you’re generally not required to pay them for that day. As long as employees are notified of the closure before they report to work, no pay is required.

If non-exempt employees have accrued vacation or PTO time, you may require them to use it to cover the holiday closure. This should be clearly stated in your company policy.

Exempt (Salaried) Employees

This is where it gets important. For exempt employees paid on a salary basis, federal law requires you to pay their full salary without interruption for business closures that last less than one full workweek. A “workweek” is the predefined seven-day period your company uses for payroll purposes.

Failure to maintain salary for partial-week closures can jeopardize the employee’s exempt status. You may require exempt employees to use accrued PTO to cover the closure—but if they don’t have enough accrued time, you must still pay their full salary. You cannot make deductions from an exempt employee’s pay for employer-mandated closures.

Is Double Time or Time-and-a-Half Required?

No. Federal law does not require employers to pay double time, time-and-a-half, or any premium rate for employees who work on holidays. Premium pay is entirely at the employer’s discretion under federal law—unless state law or your company policy requires it.

State-Specific Holiday Laws

Most states follow federal guidelines with no holiday pay mandates for private employers. However, a few states have specific requirements you should know about:

Rhode Island

Rhode Island is one of the few states that requires premium pay. Employers must pay non-exempt employees time-and-a-half for work performed on Sundays and these holidays: New Year’s Day, Memorial Day, Juneteenth, Independence Day, Victory Day (second Monday in August—unique to Rhode Island), Labor Day, Columbus Day, Veterans Day, Thanksgiving, and Christmas.

Additionally, Rhode Island employees can refuse to work on Sundays or holidays without penalty, unless they work for a manufacturing company that operates continuously seven days per week.

Massachusetts

Massachusetts has “Blue Laws” that regulate when certain businesses can operate on holidays. The rules vary depending on whether a company is classified as retail, non-retail, or manufacturing:

• Retail employees cannot work on Thanksgiving or Christmas without a special permit from local police and state approval
• Retail employees can refuse to work on New Year’s Day, Memorial Day, Juneteenth, Independence Day, Labor Day, and certain other holidays without penalty
• As of January 1, 2023, Massachusetts eliminated mandatory premium pay requirements in exchange for a higher minimum wage

The rules are complex—check the Massachusetts Attorney General’s website for current guidance specific to your business type.

Other States

California, Arizona, Tennessee, Alabama, and most other states have no holiday pay mandates for private employers. Holiday pay is entirely at the employer’s discretion. Always check your specific state’s labor department for current requirements, especially if you operate in multiple states.

When Holiday Pay Becomes Mandatory

Even without a legal requirement, holiday pay can become a binding obligation through:

• Employment contracts: If your employment agreement promises holiday pay, you’re contractually obligated to provide it.
• Company policy: Written policies in your employee handbook create binding obligations that you must follow.
• Collective bargaining agreements: Union contracts typically include specific holiday pay provisions.
• Established practice: In some states, a consistent pattern of providing holiday pay may create an implied contract.

Important: Once you establish a holiday pay policy, apply it consistently. Selective application—paying some employees but not others, or revoking pay without notice—can create legal liability and potential discrimination claims.

Best Practices for Managing Holiday Pay

1. Document your policy clearly. Include which holidays are observed, whether they’re paid, eligibility requirements, and pay rates for employees who work on holidays. Put this in your employee handbook.
2. Apply policies consistently. Inconsistent application can lead to discrimination claims and employee dissatisfaction.
3. Know your state laws. If you operate in multiple states, understand the requirements in each jurisdiction.
4. Communicate changes in advance. If you need to modify your holiday policy, provide adequate notice to employees.
5. Consider floating holidays. This gives employees flexibility to observe religious or cultural holidays meaningful to them.
6. Track everything. Maintain accurate records in your payroll system for compliance and documentation if questions arise.

The Bottom Line

Federal law doesn’t require private employers to provide holiday pay—but most do anyway because competitive benefits are essential for attracting and retaining talent. The key is understanding your state’s requirements, documenting your policies clearly, and applying them consistently across your organization.