The HR Guide for Paid Holidays

Key takeaways

• While federal law does not require U.S. employers to offer paid holidays, many give salaried workers six paid holidays each year.

• The most common paid holidays in the U.S. are New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

• It’s up to employers discretion if they want to offer overtime pay to hourly workers, or if they want to offer different overtime rates for part-time vs. full-time hourly workers.

What are paid holidays?

Paid holidays are national, state, or religious holidays that employers choose to give as paid days to their employees. In the United States, there is no federal law that mandates employers to provide a paid holiday for any occasion.

However, because paid holidays are so common, many employees expect to receive paid time off on certain holidays. Human resources (HR) software such as BambooHR makes it easy to schedule holidays and administer paid time off or overtime pay.

List of common paid holidays

In the United States, there are six holidays where employers frequently provide holiday pay. These federal holidays are:

• 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).

Some generous employers also give employees even more paid holidays. Other days that employees may get off include:

• Martin Luther King Jr.’s Birthday (Third Monday in January).

• Presidents’ Day (Third Monday in February).

• Good Friday (Friday before Easter).

• Easter (varies).

• Juneteenth (June 19).

• Election Day (varies).

• Veterans Day (November 11).

• Black Friday (Friday after Thanksgiving).

• Christmas Eve (December 24).

• New Year’s Eve (December 31).

How holiday pay works for full-time vs. part-time employees

Since there is no federal law mandating holiday premium pay or paid time off, it’s up to the company to decide how they want to handle it for their workers, whether full-time, part-time, hourly, or salaried.

Generally speaking, salaried employees exempt from overtime are more likely to receive paid time off on federal holidays, especially if they work full-time. In contrast, hourly non-exempt employees typically do not receive paid time off on holidays since they are only paid for the time that they work. However, you can decide whether or not to offer paid time off for these holidays for all of your employees or institute separate holiday PTO policies for different employee types.

As for holiday premium pay, most businesses offer time and a half to incentivize hourly, non-exempt from overtime employees to work on holidays. Rhode Island remains the only state in the U.S. that mandates this practice.

If you’re worried about implementing and paying holiday premium pay for your employees, payroll software makes it easy to set pay practices for certain holidays ahead of time. Gusto, for example, supports multiple pay types, including holiday premium pay, and determines the proper overtime pay amounts automatically so you can avoid manual tracking and calculating.

How to create a holiday paid time off policy

Evaluate company needs

Before putting pen to paper, you need to consider what issues you hope to address in your holiday policy. Reflect on your company culture and values, then consider these questions:

• Which holidays are the busiest for the company? Which are the least busy?

• What’s the financial impact of shutting down the business for a holiday? 

• What tasks won’t be completed because of a closure, and how can you prepare for it? 

• What are the expectations of customers, clients, partners, or investors? 

• Is the company beholden to any collective bargaining agreements or service-level agreements?

It’s important to get a 360-degree picture of what to expect at various levels of the business during a particular holiday. Work with client-facing teams to understand customer service expectations and how holidays will affect staffing demands.

Internally, employee survey tools let you collect anonymous feedback about the business’s approach to holiday operations. Consider partnering with your company’s DEI committee and/or employee resource groups to determine the religious and cultural holiday accommodations that are appropriate for your workforce.

Understanding the cultural impact of holidays in other countries can be tricky. Learn more: Cultivating Cultural Competence in the Workplace

Write a holiday time off policy

Next, it’s time to create the actual policy. Follow these steps to write a comprehensive holiday paid time off policy:

1. Define company-recognized holidays and hours

Specify the days your company recognizes as holidays and how you’ll observe holidays that fall on Saturdays or Sundays. If you operate globally, you should also consider holidays observed in other countries — in some cases, you may be required by law to give employees the day off work.

2. Outline fair scheduling practices

If your company will remain open on a holiday, explain how managers will decide who will work, such as a system based on seniority or a rotating schedule. You could also have employees rank holidays by which one they are most willing to work, giving them a degree of control over their schedules.

Many scheduling software apps have settings to handle this for you — check out our top picks in our Employee Scheduling Software Guide.

3. Explain eligibility requirements

If the whole business shuts down during the holiday, specify who is eligible for holiday pay. For example, your holiday policy could require a 90-day waiting period after an employee is hired before they’re eligible for holiday pay. Some companies only provide holiday pay to executives or administrative staff; others require employees to work the day before and the day after the holiday to receive holiday pay. 

4. Determine how and when employees will be paid

Indicate whether employees who work holidays will receive additional compensation, such as a bonus or a shift differential. For example, your holiday policy can make it standard to pay all employees time and a half as an incentive for working during the holiday.

It’s important to note, however, that non-exempt employees are legally entitled to overtime pay whether they receive special holiday pay or not.

5. Set a policy review schedule

At a minimum, you should review your holiday policy on an annual basis to update holiday dates for the year ahead. This also provides an opportunity to evaluate whether the current holidays are culturally relevant and work with the company’s staffing requirements.

Communicate the new policy to employees

Policies are only effective — and enforceable — if everyone on the team knows about them, and your holiday policy is no different.

Likewise, it’s important to make sure managers understand all holiday protocols alongside other time off policies. Deviation from the policy could risk litigation, especially if it appears that an employee’s time off request was approved or denied for discriminatory reasons. 

To make sure your bases are covered, have each employee formally acknowledge the policy. An HRIS works well in these instances — for example, Connecteam notifies employees of new policies and collects electronic signatures. If you’re concerned about employees adhering to new policies, you can utilize these acknowledgments as proof that each employee is aware of changes.