--- title: "Do Employers Have to Pay Holiday Pay? Federal Rules for Thanksgiving, Christmas and New Year | The Staffing Guide" description: "Do employers have to pay holiday pay? Federal FLSA rules for hourly and salaried staff on Thanksgiving, Christmas and New Year, plus holiday closure pitfalls." --- # Do Employers Have to Pay Holiday Pay? Federal Rules for Thanksgiving, Christmas and New Year [Pay, Tax & Contracts](https://russellstaffinginc.com/category/pay-tax-and-contracts/) Under federal law, private employers do not have to give paid holidays or pay a premium for working on Thanksgiving, Christmas or New Year’s Day. The Department of Labor says the Fair Labor Standards Act “does not require payment for time not worked, such as vacations or holidays,” and does not require overtime simply because a day is a holiday. What federal law does require is overtime for non-exempt employees who work more than 40 hours in the workweek, and full salary for exempt employees in most weeks when the business closes for part of the week. State law, your own policy and any employment contract can add more. This guide covers the federal baseline for both hourly and salaried staff, the common mistakes around holiday weeks, and how to write a holiday policy that people understand before the season starts. ## The Federal Baseline ### Paid time off for holidays is a policy choice The Department of Labor’s [holidays page](https://www.dol.gov/general/topic/workhours/holidays) is short and direct. The FLSA does not require payment for time not worked, such as vacations or holidays, and those benefits are generally a matter of agreement between the employer and the employee or their representative. If your handbook promises eight hours of holiday pay for Thanksgiving, you have created an obligation. If it does not, federal law does not create one. ### Working on a holiday does not trigger overtime by itself The DOL’s [overtime page](https://www.dol.gov/agencies/whd/overtime) says covered, non-exempt employees must receive overtime for hours worked over 40 in a workweek, at one and one-half times their regular rate, and that the FLSA does not require overtime pay for work on Saturdays, Sundays or holidays as such. Holiday hours count toward the 40, like any other hours worked. They do not count double. So an hourly retail associate who works 36 hours across a week that includes Thanksgiving Day is owed straight time for all 36 hours under federal law, even if eight of those hours fell on the holiday. If the same associate works 46 hours that week, six hours are overtime. ### State law may say more A handful of states have their own rules on holiday work in particular industries, and many states set their own overtime and final-pay rules. Check your state labor department before finalising holiday schedules, especially if you operate in more than one state. ## Salaried Exempt Employees and Holiday Closures The most common holiday payroll mistake is docking an exempt employee’s salary when the business closes. The DOL’s [Fact Sheet 17G on the salary basis requirement](https://www.dol.gov/agencies/whd/fact-sheets/17g-overtime-salary) is clear on the main points: - An exempt employee “must receive the full salary for any week in which the employee performs any work.” - If the employee is ready, willing and able to work, deductions may not be made for time when work is not available. - Exempt employees do not need to be paid for any workweek in which they perform no work. Apply that to the holidays. If you close the office on December 24 and 25 and an exempt manager works the other three days of the week, you owe the full weekly salary. You cannot reduce it because the business chose to close. If you close for an entire week and the employee does no work at all that week, the salary basis rule does not require payment for that week, although your policy, contract or state law may. Fact Sheet 17G lists limited exceptions, including deductions when an exempt employee is absent for one or more full days for personal reasons other than sickness or disability, and the rule that an employer need not pay the full salary in the initial or terminal week of employment. A business closure is not one of the exceptions. ### Can you require exempt staff to use PTO for a closure? Federal guidance on the salary basis focuses on deductions from salary, not from leave banks, and state law on this varies. Some employers require exempt staff to use paid leave for closure days; others simply treat closure days as paid holidays. Decide your approach, put it in writing and apply it consistently. If you operate in a state with strong rules on paid leave, confirm the approach there first. ## Hourly Employees: Practical Scenarios | Scenario | Federal rule | |---|---| | Store closed Thanksgiving; hourly employee not scheduled | No pay required unless your policy provides holiday pay | | Employee works 8 hours on Christmas Day, 32 hours total that week | Straight time for 32 hours; no federal holiday premium | | Employee works 8 holiday hours, 44 hours total that week | 4 hours of overtime at time and one-half | | Your policy pays 8 hours of holiday pay for a day not worked | Pay as promised; hours not worked generally do not count toward the 40 for overtime | The last row is worth stressing. Overtime is calculated on hours worked. Paid holiday hours where no work was performed are paid time off, not hours worked, so they do not normally push someone over 40. If your policy treats them differently, follow your policy. ### Voluntary holiday premiums Many employers pay time and a half or a flat bonus to people who work on Thanksgiving or Christmas, because it helps fill unpopular shifts. That is a sensible retention tool. Before you announce a premium, ask your payroll provider how it will interact with your overtime calculations, because some extra payments must be included in the regular rate on which overtime is calculated. The DOL’s [fact sheet on bonuses](https://www.dol.gov/agencies/whd/fact-sheets/56c-bonuses) explains, for example, that bonuses employees are promised and expect, such as attendance bonuses, are nondiscretionary and are included in the regular rate. Holiday gifts are a different matter. If you are planning a year-end cash bonus or gift card, our guide to [how holiday bonuses are taxed](https://russellstaffinginc.com/how-holiday-bonuses-are-taxed-employers/) covers withholding and the regular-rate question. ## Seasonal and Temporary Staff The same rules apply to seasonal employees you hire directly. If you use a staffing agency, the agency is typically the employer that runs payroll, but the hours your client site records drive overtime. Our explainer on [how overtime works for temp employees](https://russellstaffinginc.com/how-overtime-works-when-you-are-a-temp-employee/) explains who pays it. Make sure your timekeeping captures every hour, including pre-shift setup and late closes on the busiest days of the year. For businesses that rely heavily on part-time retail staff, it helps to understand what the job involves and how people in it are typically scheduled. The occupational profile for [retail salespersons](https://netmentors.com/careers/retail-salespersons/) on netmentors.com is a useful reference when you are designing holiday shift patterns that people will actually accept. ## Writing a Clear Holiday Pay Policy A good policy answers the questions employees will ask in November before they ask them: - **Which days are paid holidays**, and for which employees (full-time only, or part-time too). - **Eligibility rules**, such as a waiting period for new hires or a requirement to work the scheduled days before and after the holiday. - **What happens when a holiday falls on a weekend.** Christmas 2026 falls on a Friday, so this matters less this year, but it will come up. - **Premium pay for working a holiday**, if any, and how shifts are assigned. - **Closure days** for exempt and non-exempt staff, and whether PTO is used. - **Seasonal staff**: whether they are eligible for any holiday benefit. Communicate it early. Our guide to [managing seasonal workers](https://russellstaffinginc.com/how-to-manage-seasonal-workers-a-practical-guide-for-small-businesses/) has more on setting expectations before the first shift. ## Frequently Asked Questions ### Is holiday pay required by federal law? No. The Department of Labor says the FLSA does not require payment for time not worked, such as holidays. Holiday pay is a matter of agreement between employer and employee, though some state laws add requirements. ### Do I have to pay time and a half for working on Thanksgiving? Not under federal law. The FLSA requires overtime only for hours over 40 in a workweek. Holiday hours count toward that total. Check your state law and your own policy. ### Can I dock an exempt employee’s salary if we close for Christmas Eve? Not if the employee works any part of that week. DOL Fact Sheet 17G says exempt employees must receive the full salary for any week in which they perform any work, and no deductions may be made for time when work is not available. ### Do paid holiday hours count toward overtime? Generally no. Overtime under the FLSA is based on hours actually worked, and a paid holiday where no work is performed is not hours worked. Your policy or state law could treat it differently. ### Do part-time employees get holiday pay? Only if your policy or an agreement provides it, or a state law requires it. 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