What Are Federal Holidays? Employer Guide To Pay & Compliance

Federal holidays are the 11 public holidays established by Congress on which federal agencies close and federal employees receive paid time off. Private employers are not required by federal law to observe these holidays, offer paid time off, or pay a premium rate for holiday work. Understanding the difference helps you build compliant policies and set clear employee expectations.

What Are Federal Holidays?

Federal holidays are days designated by federal law on which federal government offices close and federal employees receive paid time off.

There are 11 federally recognized holidays in the U.S. They are:

• New Year's Day (January 1)
• Martin Luther King Jr. Day (Third Monday in January)
• Presidents' Day / Washington's Birthday (Third Monday in February)
• Memorial Day (Last Monday in May)
• Juneteenth National Independence Day (June 19)
• Independence Day (July 4)
• Labor Day (First Monday in September)
• Columbus Day (Second Monday in October)
• Veterans Day (November 11)
• Thanksgiving Day (Fourth Thursday in November)
• Christmas Day (December 25)

When a federal holiday falls on a Saturday, it is typically observed on the preceding Friday. When it falls on a Sunday, it is usually observed on the following Monday. States may also designate their own holidays, which can add observance requirements depending on where your business operates.

Are Private Employers Required To Observe Federal Holidays?

The FLSA does not require private employers to close on federal holidays, offer paid time off, or pay a premium rate for holiday work. Private employers have broad discretion in deciding which holidays, if any, to treat as paid days off.

That said, some state laws impose additional requirements, and certain industries have established norms worth accounting for. Retail and hospitality typically remain open on most holidays, with additional pay sometimes offered as a benefit. Healthcare operates on a 24/7 basis where holiday differentials are common. Finance and banking may follow Federal Reserve closure schedules. Even where no legal requirement exists, employer practices and offer letter language can create implied obligations, so documenting your policy clearly is recommended.

Federal Holiday Pay Rules

Federal law does not require employers to pay a premium rate (such as time-and-a-half) when employees work on a holiday. Holiday pay is treated as a matter of company policy, not a legal mandate.

Overtime under the FLSA only applies if an employee works more than 40 hours in a workweek. Any hours beyond 40 must be paid at 1.5 times the regular rate, regardless of whether those extra hours fell on a holiday. The holiday itself does not trigger overtime; the hours worked do.

A few additional considerations:

• Exempt Employees: Must generally receive their full salary for any week in which they work, even if the business observes a holiday
• Nonexempt Employees: Only entitled to pay for hours actually worked, unless company policy provides holiday pay

Building a Compliant Holiday Pay Policy

A clear, written holiday policy may reduce confusion and help protect your business from wage disputes and discrimination claims. When building or reviewing yours, consider the following:

• Decide which holidays to observe as paid vs. unpaid, and document the list
• Apply the policy consistently across employee classes: inconsistent treatment can create legal exposure
• Include the policy in your employee handbook and review it annually
• Check state-specific requirements: some states have laws governing holiday pay for certain industries or employee types
• Factor holiday pay into overtime calculations correctly: paid holiday hours may count toward the 40-hour threshold depending on your policy structure
• Decide whether floating holidays are offered as flexible personal days in lieu of fixed holidays, and document how they accrue or expire
• Clarify in your policy whether holiday pay is separate from or drawn from an employee's PTO bank

How Paychex Can Help

Managing holiday pay accurately across your workforce takes more than a spreadsheet. Paychex offers payroll solutions that can help automate holiday pay calculations and flag overtime thresholds.