September 26, 2024

What Is Holiday Pay, and Who’s Eligible to Receive It?

Some businesses are fortunate enough to stay closed during holidays. But from hotels to pharmacies to gas stations, many workers at essential businesses need to clock in regardless of the day of the year.

Holidays are generally a time to recharge and spend quality time with friends and family. Most employers recognize that fact and give you extra compensation if you work on holidays — and some even pay you to take the time off.

But what is holiday pay? How does holiday pay work? And are you eligible?

What is holiday pay?

Holiday pay is special compensation employers give employees around specific holidays. For some employees, this may mean a paid day off. For others, it’s additional incentive pay your employer provides in exchange for you giving up your day and working.

So, how much is holiday pay? It varies from company to company. Policies differ, and there’s no federal law that makes employers pay employees for holidays (excluding federal employees). That said, some states do have mandatory paid holiday laws, and many organizations have internal holiday pay standards.

Here’s a quick guide to different holiday pay policies you might encounter:

Paid time off

Most companies offer salaried employees a paid day off for big public holidays like the 4th of July or Christmas. Employees receive their regular pay for that day without having to work.

Time-and-a-half

After paid time off, time-and-a-half is the second most common form of holiday pay. Employees who work during a holiday receive their regular wage (time), plus 50% (half). For example, a person may earn $20 an hour on a regular shift and $30 on a holiday shift. While this extra pay isn’t mandatory, it’s a great incentive for employees to work on holidays and make the work worth it.

Double time

Some employers may offer double time — twice a person's wage — for working during a holiday instead. While time-and-a-half is the default holiday pay premium for most companies, some increase it to sweeten the deal and encourage people to work on holidays. Let’s say you usually earn $25 per hour. If your company’s holiday pay is double time, then you’ll earn $50 per hour for that shift.

Holiday bonus

A holiday bonus is a specific payment some employers give out during the holiday season. This could be a thank-you for working on the holiday or simply as a bonus for working hard during the year.

Floating holidays

Instead of offering paid time off on a specific holiday, some employers give people an option to choose which days to take. This is particularly common for employees who receive a salary rather than hourly pay. Some people use it to take time off on holidays that aren’t part of the company’s standard days off, but others use it for birthdays, vacations, or events.

What is the purpose of holiday pay?

Holiday pay policies, like time-and-a-half and double time, incentivize people to work on holidays. Even if nobody wants to cover a Christmas shift or a New Year’s work day, somebody has to do it. The extra pay lessens the blow of not taking the time off.

This arrangement benefits both the employee and the employer. Employees earn a wage premium for the same shift they’d be working any other day, which is particularly great for people who don’t have plans for a particular holiday. And employers avoid scrambling for workers during holidays. Good holiday pay also helps businesses become a more competitive workplace, improving employee retention, attracting talent, and creating better company culture.

Is holiday pay mandatory?

Holiday pay isn’t mandatory for most employers. The primary exception to this is federal government employees, who receive holidays off because government offices have to close. Otherwise, for private sector employees (aka most American workers), holiday pay depends on union contracts and internal company policies.

Some states, like Massachusetts and Rhode Island, have their own laws outlining specific holiday pay requirements. Check your particular state regulations, internal company policies, and contracts to know what, if any, holiday pay you're eligible to receive. Your pay stub should also state any wage premium you earn during a holiday shift.

Who’s eligible for holiday pay?

Hourly and salaried employees might get holiday pay, depending on where they work. Freelancers and contractors — people who work for themselves — generally don't receive holiday pay unless it’s written into their contracts.

Here's a list of the types of employees who might receive holiday pay:

Federal employees

As federal government offices close during holidays, their employees also get the day off with pay. These employees enjoy eleven paid days off where they can relax, spend time with family, or get things done around the house.

https://www.earnin.com/### Salaried employees

Do salaried employees get holiday pay? It depends on the employer. Most salaried workers have a set number of hours they’re supposed to work every week — usually 37.5 or 40 — and don’t get paid extra beyond that. But some employers give people certain holidays off with pay, similar to a federal employee.

Hourly employees

Some hourly employees get paid holidays, but it’s rare. Instead, most get unpaid days off during holidays because they can simply request not to be scheduled that day. Those who do work on holidays might get a little extra pay, depending on the company’s policies.

What are the paid holidays in the U.S.?

The vast majority of Americans receive public holidays off, including New Year’s Day, Thanksgiving, and Christmas. Here's a list of the nine most common paid holidays. Keep in mind that not all employers observe all of the holidays on this list.

New Year’s Day: January 1
Martin Luther King’s Birthday: 3rd Monday in January
Washington’s Birthday: 3rd Monday in February
Memorial Day: Last Monday in May
Juneteenth: June 19
Independence Day: July 4
Labor Day: 1st Monday in September
Columbus Day: 2nd Monday in October
Veterans’ Day: November 11
Thanksgiving: 4th Thursday in November
Christmas: December 25

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Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.

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