Federal law generally does not mandate that employers provide double time or any premium pay for employees who work on a holiday. The Fair Labor Standards Act (FLSA), which governs wage and hour issues for most American workers, treats a holiday the same as any other workday when determining the required rate of pay. An employee’s entitlement to premium pay for working a holiday must be determined by sources other than federal statute.
The Federal Standard for Premium Holiday Pay
The Fair Labor Standards Act (FLSA) establishes minimum wage and overtime standards for most American workers. This federal statute does not designate certain days, such as federal holidays, as requiring a premium rate of pay. The FLSA ensures employees are paid at least the minimum hourly wage.
For non-exempt employees, the FLSA only requires the standard rate of time and a half for all hours worked over 40 in a single workweek. The law makes no distinction between an hour worked on a regular day and an hour worked on a holiday in terms of the base pay rate. If an employer chooses to offer holiday pay, it is considered a benefit or a premium, not a legal mandate.
The decision to close, offer time off, or provide additional compensation for working a holiday is left entirely to the employer’s discretion. An employer is compliant with federal law if they pay an employee their straight time rate for working on a holiday. The federal standard focuses solely on the total number of hours worked in a week, not the specific calendar days those hours fall on.
Understanding the Different Pay Rates
The term “double time” refers to a compensation rate equal to 200% of an employee’s regular hourly rate of pay. This rate is often reserved for working on major holidays or for work performed beyond a certain daily hour threshold. This premium rate is never mandated by the FLSA, but it is a common provision in collective bargaining agreements or specific company policies.
A standard “time and a half” rate is 150% of the regular rate. This is the federally mandated minimum rate for non-exempt employees who work more than 40 hours in a workweek. When people discuss “holiday pay,” they are usually referring to a premium rate applied to the hours worked on the holiday itself, calculated in addition to the regular wages earned for that shift. This holiday premium is an employer-provided benefit separate from weekly overtime requirements.
Sources of Mandatory Holiday Pay
While the federal government does not enforce premium holiday pay, mandatory compensation for holiday work can originate from three distinct areas.
The most common source is a written company policy or the individual employment contract. Many employers offer a premium as an incentive to staff hard-to-fill shifts on holidays. When included in an employee handbook, this policy becomes a binding obligation for the company.
A second source is a collective bargaining agreement established between a union and an employer. These union contracts frequently negotiate specific premium rates, such as time and a half or double time, for working on designated holidays. The terms outlined in the agreement supersede the basic FLSA requirements and become legally binding for the covered employees.
The third source is a small number of state or local jurisdictions that have enacted their own wage laws requiring premium pay for work performed on specific holidays. These laws are rare, but where they exist, they override the federal standard. They compel employers to compensate employees at the higher mandated rate.
How Holiday Hours Affect Weekly Overtime Calculation
A frequent point of confusion involves how holiday hours interact with the 40-hour weekly threshold for mandatory federal overtime. For non-exempt employees, only the actual hours physically worked on the holiday count toward the 40-hour calculation in a workweek. If an employee works eight hours on a holiday, those eight hours are included in the total hours worked, and any hours worked beyond 40 in that week must be paid at the time and a half rate.
Conversely, any paid time off (PTO) or paid holiday hours that an employee receives but does not physically work are excluded from the 40-hour overtime trigger. For example, if an employee receives eight hours of paid holiday leave but only works 35 hours of regular time, they are only credited with 35 hours worked for federal overtime purposes. The FLSA mandates overtime based only on physical time spent performing job duties, not paid benefits.
If an employer voluntarily pays a premium rate, such as double time, for the hours worked on the holiday, the premium portion of the pay can be excluded from the calculation of the employee’s regular rate of pay for weekly overtime purposes. The straight-time portion of the holiday pay, however, must be included in the regular rate calculation. This distinction helps prevent the employer from paying an inflated overtime rate later in the workweek.
Holiday Pay for Exempt Salaried Employees
The rules surrounding holiday pay operate differently for employees classified as exempt under the FLSA. Exempt employees are typically salaried and meet specific duties tests, making them ineligible for overtime compensation. Because their compensation is a fixed salary paid for the workweek, their pay generally remains the same even if they work on a holiday.
If an exempt employee is required to work on a holiday, they do not automatically receive extra compensation. Their salary is intended to cover all work performed, and the weekly payment is generally not increased or decreased based on the specific days or hours worked. Any additional compensation, such as a bonus or an extra day of vacation, is entirely dependent upon the specific policy established by the employer.
An employer may choose to offer an additional day of floating vacation or a lump-sum bonus to an exempt employee who works a holiday. These benefits are an incentive and not a requirement under the FLSA. For a salaried exempt employee, holiday compensation is a matter of company policy rather than a legal entitlement.