Holiday pay can be confusing for employees and small business owners alike. Understanding what is holiday pay, and how it works helps businesses stay fair, compliant, and efficient. In this guide, we’ll explain holiday pay, who qualifies, and how to calculate it.
We’ll also cover legal guidelines and share practical tips for businesses using Remire, a Global HR Platform to manage payroll, contractors, and global teams.
What is Holiday Pay?
Holiday pay is money employees earn for working, or taking time off, on recognized holidays.
Regulations on Holiday Pay
In the U.S., there’s no federal law requiring holiday pay. Employers decide their own policies. Some states, like California, have specific rules on overtime or holiday work.
Companies must follow these laws to avoid fines and penalties.
Eligibility Requirements to Consider
Full-time employees typically get holiday pay. Part-time workers or contractors may qualify based on company policies.
For businesses hiring internationally or managing remote teams, Remire’s Employer of Record services ensure compliant payroll and benefits for all employees.
How Holiday Pay Works
If a company closes on a holiday, eligible employees get their usual pay. If employees work on a holiday, they may earn extra pay, such as time and a half. Clear policies prevent confusion and disputes.
For businesses managing both full-time staff and contractors, contractor management solutions can help streamline pay rules.
How Does Holiday Pay Work?
When Employees Get the Day Off
Employees receive regular pay even if they don’t work on a holiday. This is common for full-time positions.
When Employees Work the Holiday
Some companies pay extra for working holidays. It may be 1.5x or 2x the normal rate.
What Does Time and a Half Mean?
Time and a half is a pay multiplier. For example, if someone earns $20/hour, time and a half is $30/hour.
Does Holiday Pay Count Toward Overtime?
Holiday pay may be included when calculating hours worked for overtime. State rules differ, so it’s important to track pay accurately. Businesses can use Remire’s payroll management services for precise calculations.
Who Qualifies for Holiday Pay?
States with Holiday Pay Requirements
Some states enforce stricter labor rules. For example, California requires overtime pay for certain holiday hours. Other states leave it to the employer.
Scenario 1: Employee Doesn’t Work, Gets Paid Holiday
If an employee works full-time and the company closes for Thanksgiving, he still receives regular pay. Part-time workers or contractors may not qualify.
Remire helps set clear, compliant policies for all employment types, including remote hiring and global payroll solutions.
How to Calculate Holiday Pay: Step-by-Step Examples
- Identify regular hourly pay.
- Multiply by hours worked (or scheduled if the holiday is off).
- Apply any holiday multiplier (1.5x or 2x).
How Much Is Holiday Pay for $16 an Hour?
- Regular pay: $16/hour
- Holiday multiplier: 1.5x
- Holiday pay = $16 × 1.5 = $24/hour
Holiday Pay vs PTO
Paid Time Off (PTO) is a general leave benefit. Holiday pay is for specific recognized holidays. PTO can be used anytime; holiday pay is fixed for company-recognized days.
For businesses managing PTO and holiday pay together, Remire HRIS solutions make tracking simple.
Is Holiday Pay Mandatory?
Holiday pay isn’t federally required. Some states or contracts mandate it. Businesses hiring globally must also follow local laws. Remire supports startups and companies expanding internationally with global payroll solutions.
Why Offer Holiday Pay?
Reduce Turnover and Increase Retention
Employees feel valued when companies offer holiday pay. This reduces turnover and lowers hiring costs.
Boost Motivation and Productivity
Fair pay improves employee engagement and performance.
Support Diversity and Inclusion
Holiday pay recognizes cultural and religious holidays. It supports an inclusive workplace.
How to Create a Holiday Pay Policy
- List recognized holidays.
- Decide eligibility (full-time, part-time, contractors).
- Determine pay rates (normal, time and a half, double).
- Communicate policies to all employees.
- Track pay using payroll software or payroll outsourcing solutions.
Holiday Pay FAQs
What is holiday pay, and how does it work?
Extra pay for working or taking time off on recognized holidays.
What does time and a half mean?
A pay rate of 1.5 times the regular hourly wage.
How much is holiday pay for $16 an hour?
$16 × 1.5 = $24/hour (time and a half).
Does holiday pay count toward overtime?
Usually yes, depending on state rules.
Wrapping Up
Understanding what is holiday pay is essential for employee satisfaction and compliance. Remire helps businesses manage pay efficiently. We ensure fair policies for full-time employees, part-time staff, and contractors.
