I do not close my business on holidays, but I pay my employees extra when they work on holidays. I recently met another employer who pays nothing extra on holidays. Aren’t they breaking the law?


Neither federal nor state law require employers to provide employees with days off for certain holidays or to pay employees extra if they do work on holidays. On holidays, employers are only required to pay employees their regular rate of pay, including overtime if employees work more than eight hours in a workday or 40 hours in a workweek.

Nevertheless, many employers have policies concerning holidays. Some employers give employees certain holidays off but still pay them. As a result, an employer could have an employee who works five 8-hour days (40 hours), and then is paid for an additional eight hours for the day off. Since an employer must pay overtime if an employee works more than 40 hours in a workweek, would that employee be entitled to overtime? Since the employee only actually worked 40 hours, the employer would not owe him any overtime.

Other employers stay open on holidays but pay employees “holiday pay.” Some pay all regular hours worked on a holiday at a premium rate of time-and-a-half. There is no law dictating either that holiday pay be provided, or that if it is provided, that it be in a certain amount. However, the payment of “holiday pay” does affect the employer’s calculation of the regular rate of pay for overtime purposes.

For example, an employee earns $8.00 per hour and is paid $12.00 per hour for hours worked on a holiday. Christmas week she works eight hours on Christmas Day and ten hours a day for the other four days in the workweek, for a total of 48 hours in the week. Her straight pay is $320 for the non-holidays ($8/hour x 40 hours) and $96 for the holiday ($12/hour x 8 hours), for a total of $416. How much does the employer pay her for the eight hours of overtime? An employer would first divide the total straight pay by the number of hours worked, i.e., $416 divided by 48 hours, which equals $8.67 per hour. The overtime premium for that week would be $4.34 ($8.67 divided by 2). Therefore, the employee would be owed an additional $4.34 per hour for the eight hours of overtime or $34.72. The total compensation owed for that week would be $450.72. An employer that fails to pay this slightly higher premium for that workweek could be subject to claims of unpaid wages and penalties by employees.

It is wise for an employer to have its holiday pay policy in writing so that there is no question as to whether the business is open or closed on holidays, and as to whether employees are paid their regular pay or premium amount if they work on holidays. Once that policy is established, all employees must be treated the same. An employer cannot choose to offer some employees holiday pay and not others, or it may be subject to a claim of discrimination.
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