Holiday Pay

Definition

The term holiday pay refers to compensation employers provide to their employees for time not worked on a holiday.  Employers are not required under the law to provide employees with this form of compensation.  For this reason, holiday pay is considered a benefit, and is typically negotiated as part of a collective bargaining agreement.

Explanation

While many businesses pay their employees for time not worked on a holiday, this benefit is not required under a law such as the Fair Labor Standards Act.  Federal employees are entitled to ten paid holidays and many businesses have agreed to similar arrangements.  The list of federal holidays and the day they are celebrated is as follows:

  • New Year's Day (January 1st), Birthday of Martin Luther King, Jr. (third Monday in January), Washington's Birthday / President's Day (third Monday in February), Memorial Day (last Monday in May), Independence Day (July 4th), Labor Day (first Monday in September), Columbus Day (second Monday in October), Veterans Day (November 11), Thanksgiving (fourth Thursday in November), Christmas Day (December 25).

Special Rules:  If a holiday falls on a Saturday, it is celebrated one day earlier (Friday).  If a holiday falls on a Sunday, it is celebrated one day later (Monday).

Employers are not required to provide an employee extra pay (overtime or a premium) when they work on a holiday.  Again, this benefit is usually negotiated as part of a collective bargaining agreement.

"In Lieu of" Holidays

If an employee works a flexible schedule, they may also be entitled to an "in lieu of" holiday if it falls on one of their regular days off.  If entitled to this benefit, the employee would typically be paid for time not worked on their first regular workday following the holiday.

Related Terms

overtime pay, back pay, hazard pay, collective bargaining, floating holiday, mandatory overtime, pay stub, personal days, sick pay, vacation pay