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Is Holiday Pay Mandatory In Your State?
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Is Holiday Pay Mandatory In Your State?

One Minute Takeaway

  • The United States has no federal law requiring private companies to offer holiday pay.
  • Two states, Rhode Island and Massachusetts, have special laws about holiday pay.
  • Companies are not generally required to pay non-exempt employees for days they do not perform work.

Once November rolls around, many employees look forward to receiving much needed time off and holiday pay. However, what’s surprising is that in most states, holiday pay is not mandated by law for workers in the private sector.

Despite this, many private companies provide some form of holiday pay to their employees. This is because providing holiday benefits are often expected and used to reduce employee turnover and improve morale. 

Do you know the laws in your state and jurisdiction? The only employers who are required to provide holiday pay are federal employers. There are also 2 states; Rhode Island, and Massachusetts that have special laws about holiday pay that employers will want to keep in mind. Fortunately, we’re covering that and other important details on holiday pay.

Holiday Pay Laws

Although it’s often customary for employers to provide, the United States has no federal law requiring private companies to offer holiday pay. It’s true, federal employees are protected by law to receive 11 paid holidays per year. And, the Fair Labor Standards Act (FLSA) requires an employer to pay its employees for time worked. But technically this means that if an employee takes the day off for Christmas, or even works a holiday shift, employers don’t have to pay them for time not worked. However, it will be notated in the company policy whether or not holiday pay is provided. It is always a good idea to consult with an employment attorney.

Private Employees Access to Holiday Pay

The Bureau of Labor Statistics reported in March 2022 that private employees in the U.S. receive an average of eight paid holidays per year. The number and percentage vary from industry to industry, with 81% of all private employees receiving access to paid holidays.

If employees are represented by a union, then any holiday pay will be included in their collective bargaining agreement. 

Holiday Policy in the Private Sector

In practice, most private sector employers in the US give their employees the day off for national holidays, or they pay them time-and-a-half for working on the day

Some companies also offer a floating holiday, which the employee can take at any time. This time off is considered to be an employee benefit, just like health insurance and free soft drinks in the break room. In 2020, many larger employers also decided to offer Juneteenth (June 19) as a paid holiday for their employees, leaving many employees pleasantly surprised. This practice has continued to grow through 2022, and into 2023.

Federal Holidays 2023

The difference between public and private employees has been a debated topic in America when it comes to employee benefits. While they both work hard, there are some key differences between the two regarding holiday pay. Federal employees are mandated to take off with pay for the following 11 holidays.

2023 Official Holiday Dates for Federal Employees:

  • January 2 – New Year’s
  • January 16 – Martin Luther King, Jr. Day
  • February 20 – George Washington’s Birthday/Presidents’ Day
  • May 29 – Memorial Day
  • June 19 – Juneteenth National Independence Day
  • July 4 – Independence Day/Fourth of July
  • September 4 – Labor Day
  • October 9 – Columbus Day/Indigenous Peoples Day
  • November 10 – Veterans Day
  • November 23 – Thanksgiving
  • December 25 – Christmas
  • **Every 4 years, Federal employees also receive holiday pay for inauguration day, January 20th. 

What Happens If The Holiday Falls on a Weekend?

If the holiday happens to be on a Saturday, then the employee will receive the Friday preceding the holiday off. If the holiday falls on a Sunday, then they get the following Monday off. 

What Holidays do Private Sector Employees Receive?

While it is not required, in general, many private sector employers provide paid holiday time for their employees, and many of those holidays coincide with federal holidays. 

Private Sector employees may not get the same 11 days that Federal employees do; however, there are 6-8 that are typically provided (never required), and the rest is up to the employer if they want to include more.

Typical Paid Holidays – Private Sector (though not required)

  • New Year’s Day
  • Easter
  • Memorial Day
  • Independence Day/Fourth of July
  • Labor Day
  • Thanksgiving Day
  • Friday after Thanksgiving
  • Christmas Day

Optional Holidays – Private Sector

  • George Washington’s Birthday/Presidents’ Day
  • Juneteenth
  • Good Friday
  • Martin Luther King, Jr. Day
  • Veterans Day
  • Columbus Day/Indigenous Peoples Day
  • Christmas Eve
  • New Year’s Eve
  • Election Day
  • Floating Holidays – used at the employee’s discretion.

2023 for Massachusetts “Blue Laws” Changes

Massachusetts is unique in that it currently requires premium pay on Sundays and holidays for non-exempt retail employees. 

On January 1, 2023, retail employers are no longer required to provide Sunday and holiday premium pay rates to employees. This will help employers lower the cost of doing business in the retail market. 

The “Blue Laws” in Massachusetts categorize businesses into retail, non-retail, or manufacturing. Each is treated a bit differently. Non-retail, and manufacturing businesses need permits by the local police to be open on Sundays and most holidays unless they have exemptions. Retail businesses do not require a permit to be open on Sundays.

Many non-retail and manufacturing businesses require a permit to open on certain holidays. The holidays that are the most restricted are Memorial Day, Independence Day, Labor Day, Columbus Day before noon, Veteran’s Day before 1:00 pm, Thanksgiving Day, and Christmas Day. 

This is an important change for 2023 in Massachusetts. An important note for Massachusetts is that while a company may get a permit to open on some holidays, they cannot force their employees to work on those days.

Massachusetts Public Holidays 2023

  • New Year’s Day – Monday, January 2, 2023
  • Martin Luther King Jr. Day – Monday, January 16, 2023
  • Washington’s Birthday – Monday, February 20, 2023
  • Patriot’s Day – Monday, April 17, 2023
  • Memorial Day – Monday, May 29, 2023
  • Independence Day – Tuesday, July 4, 2023
  • Labor Day – Monday, September 4, 2023
  • Columbus Day – Monday, October 9, 2023
  • Veteran’s Day – Saturday, November 11, 2023
  • Thanksgiving Day – Thursday, November 23, 2023
  • Christmas Day – Monday, December 25, 2023

Retail Rules for Working Holidays in Massachusetts

Retail employees cannot work on Christmas, Columbus Day (before noon), Thanksgiving, and Veteran’s Day (before 1:00 p.m.) unless the retail business has have a permit from their local police department as well as approval from the state’s Division of Occupational Safety.

They can work without a permit on New Year’s Day, Memorial Day, Juneteenth Independence Day, Independence Day, Labor Day, Columbus Day (after noon), and Veteran’s Day (after 1:00 p.m.), but they can refuse to work.

These holidays used to guarantee premium pay, in addition to Sundays; however, retailers are only required to pay their regular rate starting in 2023.

They can work on Martin Luther King Day, President’s Day, Evacuation Day, Patriots’ Day, President’s Day, and Bunker Hill Day without limitation or a permit.

Rhode Island Premium Pay in 2023

Beginning in 2023, Rhode Island becomes the only State that will require non-exempt employees to be paid a premium rate for working on Sundays and holidays. In the past, it was Rhode Island and Massachusetts, but now they are the last ones standing, and it is important to keep up to date as many are shocked by the elimination of the “Blue Laws” in Massachusetts. 

Rhode Island Public Holidays 2023

  • New Year’s Day – Monday, January 2, 2023
  • Memorial Day – Monday, May 29, 2023
  • Independence Day – Tuesday, July 4, 2023
  • Victory Day – Monday, August 14, 2023
  • Labor Day – Monday, September 4, 2023
  • Columbus Day – Monday, October 9, 2023
  • Veteran’s Day – Saturday, November 11, 2023
  • Thanksgiving Day – Thursday, November 23, 2023
  • Christmas Day – Monday, December 25, 2023

Sample Content for Employee Handbook

Here’s some sample wording you can use if you’re building an employee handbook and your company offers paid holiday time off.

Regular employees who work 40 hours per week are eligible for holiday pay. Nonexempt employees become eligible after three months of service. Exempt employees are immediately eligible on hire. Temporary or part-time employees are not eligible.

[Company Name] offers the following paid holidays for all of our eligible employees. If a holiday falls on a Saturday, the day off will be taken on Friday. If the holiday falls on a Sunday, the following Monday will be the paid day off.

  • New Year’s Day
  • President’s Day
  • Memorial Day
  • Independence Day
  • Labor Day
  • Thanksgiving Day and Day after Thanksgiving Day
  • Christmas Eve and Christmas Day

How To Manage Holiday Pay At Your Company

If your organization decides to close on specific holidays, are they required to compensate their employees? The answer to this question is dependent on the type of employment contract that was set up between an employee and their company.

What You Need to Know about Holiday Pay Policies

Per the Department of Labor, the Fair Labor Standards Act does not require payment for holidays. Employers are responsible for establishing which days are recognized as paid holidays and communicating them to employees through a company handbook.

Non-Exempt Employees

For non-exempt (overtime-eligible employees), the company is generally not required to pay employees on days in which they do not perform work. As long as all non-exempt employees are notified of the closure prior to reporting to work on the holiday, no pay is required. 

If the non-exempt employee has accrued vacation or PTO time, the employee may request or the employer may require that the employee use accrued vacation or PTO to cover the days of the holiday closure.

Exempt Employees

For exempt employees who are paid on a salaried or fee basis, federal law requires the company to pay the employee his or her regular salary without interruption for business closures that extend less than one full work week. Failure to provide this continued compensation is likely to jeopardize the employee’s exempt status

A “work week” is the predefined seven-day period that the employer uses for payroll purposes. Unless the closure extends for a full work week, the exempt employee should experience no interruption in salary for a holiday closure. 

The employer may require the exempt employee to use accrued vacation time or PTO time to cover the closure. However, if the exempt employee does not have sufficient accrued time to cover the holiday closure, the employer is required to ensure the exempt employee experiences no interruption in salary.

State-Specific Rules to Know

Is Holiday Pay Time And a Half in California?

It is not required by law to pay time and a half in California for holidays. The exceptions are that if it is a benefit that the company wants to provide, or if the employee has already worked more than 40 hours per week, or 8 hours in a day. At that point, overtime pay will kick in.

How Does Holiday Pay Work in Alabama?

A private employer does not have to pay holiday pay in Alabama, unless they choose to do so as part of their benefits package. They can also require employees to work on holidays.

What is Holiday Pay in Tennessee?

Private employers are not required by law to provide holiday pay in Tennessee, but they can choose to do so if they want to provide it as part of their benefits package.

What is The Law on Holiday Pay in Arizona?

Holiday pay is not required by law in Arizona; however, the private employers can provide this as part of their benefits package. Private employers can require employees to work on holidays.

How Paycor Helps

Holiday pay is a complicated topic. You may offer it to your employees or not, but if you do then the rules can vary depending on whether they’re exempt, non-exempt, contractors, construction workers, or freelance workers. There are also other complexities such as eligibility dates for holiday pay, or other types of payment such as vacation or sick time. Paycor can help! Unlike many of our competitors, we don’t sell off-the-shelf technology. Instead, we tailor technology, including Paycor Payroll and Paycor Time and Attendance, specifically for your business.