Holiday pay
Holiday pay is pay tied to a recognized holiday: wages for a holiday the employee takes off, or a premium for hours worked on it.
Federal law generally leaves holiday pay to you. The Fair Labor Standards ActFLSA. The Fair Labor Standards Act (FLSA) is the federal law setting minimum-wage, overtime, recordkeeping, and youth employment standards for covered employment.Click to open the term (FLSA) does not require payment for time not worked, such as vacations or holidays, and does not require premium pay for holiday work. Holiday pay is generally a matter of agreement between you and the employee or the employee’s representative. Federal contracts are the exception: Service Contract Act wage determinations, in contracts over $2,500, state holiday fringe benefit requirements, and a Davis-Bacon wage determination can require holiday pay for specific classifications. State laws can differ.
Does holiday pay change overtime?
Holiday pay generally changes overtime only when it pays for hours worked. Pay for a holiday not worked, roughly equal to normal earnings, can stay out of the regular rate, but none of it counts toward overtime owed. A premium of at least time and one-half the rate for nonholiday work, paid for holiday hours, counts as an overtime premium: it stays out of the regular rate, and you can credit it toward the overtime you owe. Holiday pay is its own earning type, separate from PTOPaid time off (PTO). Paid time off (PTO) is a single bank of paid hours an employee draws from for vacation, illness, or personal reasons.Click to open the term and sick pay.
| HOLIDAY ARRANGEMENT | OVERTIME TREATMENT |
|---|---|
| Holiday not worked, paid at about normal earnings | Can be excluded from the regular rate; not credited toward overtime |
| Holiday pay at about normal earnings, paid on top of pay for holiday hours worked | Holiday pay can be excluded; no part is credited toward overtime owed |
| Time and one-half or more for holiday hours, paid instead of idle holiday pay | An overtime premium: excluded and credited toward overtime owed |
- U.S. Department of Labor, Holiday Pay
- 29 CFR Part 778, Subpart C, Payments That May Be Excluded From the “Regular Rate”
General information, not legal or tax advice. Apply current federal and state rules with qualified guidance.