Master Holiday Pay with Ease: Your Ultimate Payroll Guide Navigating the complexities of holiday pay is essential for smooth payroll management, tax compliance, and employee satisfaction. From understanding federal holidays and state-specific blue laws to crafting the perfect PTO policy, this guide breaks down everything you need to know. Discover how Rollo HCM simplifies compliance, automates updates, and saves you time. Learn the rules for exempt and non-exempt employees, explore state regulations, and avoid costly payroll errors. Don’t let holiday season headaches slow you down—get the tools to keep your workforce and operations running smoothly!
Understanding the intricacies of holiday pay helps employers tackle payroll, taxes, and headcount planning when employees take their well-earned time off.
Holiday PTO rules vary depending on federal and state laws, industries, and the discretion of individual companies. Some states have special rules for holiday pay and time off, while others leave it entirely up to business owners.
This holiday pay guide will unpack rules for different employees across various states—and help your business avoid costly payroll mistakes.
Holiday pay is supplemental compensation employees receive during a federal holiday, typically paid out as a higher hourly rate if the employee works that day or as paid time off (PTO) if the employee doesn’t work.
According to the US Office of Personnel Management, there are eleven regular federal holidays:
Inauguration Day is an additional federal holiday celebrated every four years at the start of a new US presidential term. It typically falls on January 20.
If a federal holiday happens on a Saturday, employees can observe it the day before, on a Friday. If it falls on a Sunday, they may observe it the following day, on a Monday. If employees aren’t scheduled to work on a holiday, they can observe it the day before the holiday.
The Fair Labor Standards Act (FLSA) doesn’t legally require employers to offer PTO for federal or other holidays. Because of this, holiday pay is typically customary, given upon mutual agreement between employers and employees.
However, labor laws recognize different worker categories, and for some of them, different holiday pay rules apply. Holiday pay rules also vary depending on state laws. Read about these finer details below.
Federal employees have a special set of job protections regarding pay, benefits, and PTO. In most cases, they’re entitled to holiday PTO during all eleven federal holidays.
Private companies aren’t required by federal law to offer any holiday pay to employees.
Still, it’s customary to offer employees paid days off for major holidays. In most cases, private companies do offer holiday PTO to attract and retain talent.
Private companies typically provide PTO for:
Schedule a demo with Rollo HCM today to learn more about how to streamline your payroll processes.
Exempt employees—i.e., salaried workers “exempt” from overtime pay and minimum wage requirements mandated by the FLSA—are legally entitled to their regular salary if their business is closed for less than a full workweek.
Non-exempt employees—i.e., hourly workers who qualify for overtime pay and federal minimum wage protection—are typically not entitled to compensation for any day they don’t work. However, certain states, like Rhode Island, mandate premium pay for non-exempt employees who work on public holidays or Sundays.
Massachusetts has unique “blue laws” regulating certain activities during holidays and Sundays. These laws categorize businesses and assign special work rules:
Rhode Island mandates time-and-a-half pay for employees working on Sundays or public holidays. Workers also cannot be penalized for refusing to work on these days, except in continuous-manufacturing operations.
Since the FLSA leaves holiday pay policies up to states and businesses, regulations vary widely. States like California and Texas leave decisions entirely up to employers, while others, like Massachusetts, impose stricter guidelines.
Schedule a demo with Rollo HCM today to simplify compliance with holiday pay laws.
If you’re looking to add a holiday pay policy to your employee handbook, here’s a customizable template:
(Company Name) Holiday Leave Policies
Full-time and part-time employees
Freelancers and Independent Contractors
Freelancers and contractors aren’t eligible for paid holiday leave and may arrange holiday working hours with their managers.
Exempt Employees
Exempt employees are eligible for holiday PTO upon signing their employment contract.
Non-exempt Employees
Non-exempt employees are eligible for holiday PTO six months after signing their employment contract, compensated proportionately based on hours worked.
Rollo HCM makes managing holiday PTO seamless.
Built on a unified platform, Rollo HCM centralizes employee data across payroll, time tracking, benefits, and more. Automate updates to PTO policies, streamline compliance, and reduce errors—all while saving time and money.
Schedule a demo with Rollo HCM today and discover how we help businesses do more with less.
