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Federal Holiday Pay

Posted by Tamara

Many workers think that working on a federal holiday legally entitles them to extra pay. This is a misconception. There is no state or federal that requires a company to pay employees extra for working on a holiday.

In fact, employers are not required by law to give workers any paid holidays.

Most companies provide paid holidays, usually 5 to 7 per year. This is strictly up to the individual employer. The holiday pay policy is usually outlined in the employee handbook.

Using the term “holiday pay” for extra pay for working holidays, or evenings or weekends is incorrect. In Human Resources terminology, “holiday pay” refers to the pay a worker receives for a holiday when he or she doesn’t work. The standard policy is to pay employees an extra 8 hours than they worked during the week containing the holiday. These extra 8 hours are paid at the worker’s regular rate, not at the overtime rate.

For example, at Mitch’s company, New Year’s Day is a paid holiday, and employees get that day off. During the week with New Year’s Day, Mitch worked 40 hours. He would receive 40 hours at his regular rate, plus another 8 hours “holiday pay” at his regular rate.

State and federal laws require employees to be paid overtime for any hours over 40 in one week. Because Mitch is being paid for a day he didn’t work, the extra 8 hours are at the regular rate.

Jennifer worked 47 hours during the week of New Year’s Day. Her paycheck would reflect 40 hours at her regular rate, 8 hours of “holiday pay” and 7 hours of overtime. The holiday time counts as part of the regular work week, so she would receive 48 hours straight time and 7 hours of overtime.

Consider, though, that Jennifer’s employer pays a premium rate for working on the holiday, which fell on Thursday. She would be paid 30 hours at regular time, 10 hours of the premium rate and 7 hours of overtime, meaning she would receive 17 hours of pay at the overtime rate.


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