What employers need to know about managing holiday pay


With Memorial Day behind us and the Fourth of July just around the corner, we’ve been hearing from IPS customers lately about how to best handle employee holidays and compensation.

Under the Fair Labor Standards Act from the U.S. Department of Labor, companies are not required to pay employees for national holidays. However, businesses are responsible for notifying workers about the company’s holiday schedule, which should be announced as part of their regular employee communications or listed in the employee handbook.

Here are some common practices and regulations to keep in mind:

  • Companies are only required to pay hourly or non-exempt workers for the time spent on the job, and that does not include holidays. But employees who are salaried or exempt must receive their full salary if a holiday falls during their regular work week.
  • Employers can legally require people to work holidays because it may be necessary to their business operations.
  • Some employees receive premium pay if they work a holiday, but there is no law saying that a company has to pay a worker extra compensation.
  • When a holiday falls on an employee’s day off, many companies will slide the holiday schedule to include a day off before or after the holiday. This is a company decision not required by law, but seen as a gesture of goodwill.

Holiday schedules are different for every industry and type of job. Some companies may offer more paid holidays than others, but the key is to be consistent with company practices. If you have questions about how to manage holidays and pay, contact IPS for more.