Whether it comes at Christmas or on the Fourth of July, holiday pay is a gift from employers that makes it possible for full-time staff (and part-time employees, depending on company policy) to take time off during the workweek and still earn their regular pay. That’s because federal law—i.e., Fair Labor Standards Act (FLSA)—does not require employers to pay for time not worked.
Still, many employers recognize the value of their employees’ contributions and reward them with paid time off (PTO) on federal holidays, during the holiday season, and sometimes also other workdays of their choosing to help them balance their work schedule with some supported breaks.
Here’s an example of holiday pay: Let’s say your employee Seth usually earns $300 a day. If your company has a holiday pay policy and designates Thanksgiving as a paid holiday, then Seth would still make $300 on Thanksgiving even though he didn’t work that day.
This is on top of providing other time off, like vacation time and sick leave. Similarly, some employers choose to offer premium pay like time-and-a-half or even double time when an employee works on holidays, although no employment laws require them to do so.
What are common paid holidays to give off?
You’re the boss, so since there are no legal requirements for you to offer holiday pay, you can pick and choose which days qualify for holiday pay. Americans get an average of 7.6 paid holidays and one in four of us don’t get any paid holidays, according to research conducted by Zippia, which also found that 74 percent of Americans think it’s very important employers provide paid holidays. So at the very least, follow the federal holidays list:
New Year’s Day (January 1).
Birthday of Martin Luther King, Jr. (Third Monday in January)
Washington’s Birthday/President’s Day (Third Monday in February)
Memorial Day (Last Monday in May)
Juneteenth National Independence Day (June 19)
Independence Day (July 4)
Labor Day (First Monday in September)
Indigenous People’s Day/Columbus Day (Second Monday in October)
Veterans Day (November 11)
Thanksgiving Day (Fourth Thursday in November)
Christmas Day (December 25)
You can also consider the holidays that are recognized in the state where your business is located. This way, what you provide is on par with your geographic region. Zippia collectively cites the Northeastern states of Maine, New York, Delaware, Massachusetts, Rhode Island, New Hampshire, Vermont, Connecticut, New Jersey, and Pennsylvania as having the best paid holiday time. Zippia also shares this state-by-state breakdown:
Holidays | States where holiday is recognized |
New Year’s DayMemorial DayIndependence DayLabor DayVeterans DayThanksgiving DayChristmas Day | All 50 states |
Juneteenth | All 50 states |
Martin Luther King Jr. Day (Civil Rights Day) | All 50 states |
President’s Day | 41 states, excluding Wisconsin, Iowa, Kansas, Kentucky, North Carolina, Louisiana, Delaware, Rhode Island, and Florida |
Indigenous People’s Day/Columbus Day | 24 States, including Alabama, Arizona, Connecticut, Georgia, Idaho, Illinois, Indiana, Maine, Maryland, Massachusetts, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, Ohio, Pennsylvania, Rhode Island, South Dakota, Utah, Virginia, West Virginia |
Day After Thanksgiving | 18 states, including Delaware, Florida, Iowa, Kansas, Kentucky, Maryland, Michigan, Nebraska, New Hampshire, New Mexico, North Carolina, Pennsylvania, South Carolina, Texas, Vermont, Virginia, Washington, and West Virginia |
Christmas Eve | 12 states, including Connecticut, Delaware, Guam, Hawaii, Indiana, Kentucky, Louisiana, New Jersey, North Carolina, North Dakota, Puerto Rico, and Tennessee. |
Election Day | Nine states, including Delaware, Hawaii, Illinois, Indiana, Montana, New Jersey, New York, Pennsylvania, and Rhode Island. |
New Year’s Eve | Four states, including Kentucky, Michigan, West Virginia, and Wisconsin |
What is the standard paid holiday policy for your industry?
If you’re in the manufacturing or information business, you’ll want to step it up with the number of paid holidays you provide. In fact, Zippia’s analysis reveals that 97 percent of employees in these sectors have access to an average of nine and eight paid holidays, respectively. The same goes for the financial industry, where 94 percent have access to 9 paid holidays.
Leisure and hospitality have a poor reputation for providing paid holidays (37% have access to only an average of 6 paid holidays), so be a leader and treat your employees better than other employers in your sector. That will give your company a good human-resources reputation, which will be valuable for recruiting and retention.
This chart from Zippia shows how several industries stack up against one another with the average number of paid holidays they offer and the percentage of workers from those industries who receive those paid days off:
Industry | Percentage with access | Average number of days |
Manufacturing | 97% | 9 |
Information | 97% | 8 |
Financial Activities | 94% | 9 |
Education and Health Services | 82% | 8 |
Trade, Transportation, and Utilities | 81% | 7 |
Business Services | 78% | 9 |
Construction | 73% | 7 |
Leisure and Hospitality | 37% | 6 |
How do I set up a holiday pay policy?
Once you use all the above reference points to help determine what could be the best fit for your business and you nail down the specifics of your own holiday pay policy, be sure to communicate the details clearly to your company. One good practice is to put it in writing in your employee handbook.
Here are some considerations for specifics to include:
Which employees are eligible—e.g., Are salaried exempt eligible? What about hourly employees?
Which dates are designated as paid holidays? If you’re still not sure, here’s a quick guide to the paid holidays that most businesses give their teams.
Are there any special pay rates or bonuses for employees who have to work on designated paid holidays?
How should paid holidays be observed if they fall on a weekend?
Do you want to add floating holidays as PTO? It’s a popular option. Zippia’s research revealed that 48 percent of companies actually provide floating holidays. For this, you could let employees choose any day throughout the year, or you could allow employees to choose from paid holidays that you don’t typically offer off, such as the day after Thanksgiving, Christmas Eve, New Year’s Eve, as some examples you may or may not already include as part of PTO. Floating holidays also provide an opportunity for workers to observe religious holidays that matter to them and may not be recognized as federal holidays.
Finally, keep in mind that employees who qualify for overtime pay still need to be paid that overtime rate if they work overtime hours during your company’s designated paid holidays, regardless of whether or not you institute a special holiday pay rate.
