Paid holidays: what is their role in your compensation package?

When contemplating a new job, most people focus on the salary, but there's really more to consider than that. Health insurance, perks, retirement accounts, relocation reimbursement, and PTO/vacation all need to be taken into account when reviewing a job offer. But what about holidays? Understanding what paid holidays are included in your compensation package, as well as which ones are legally mandated, will help you plan your work-life balance more effectively and plan for the future .

In this article, we’ll discuss paid holidays and how they can factor into your career, including:

• How do paid holidays work?

• What are the eleven federally-recognized paid holidays?

• The benefits of paid holidays

• Alternatives to paid holidays

Paid holidays — what’s the deal?

In general, paid holidays are considered part of a negotiated salary and benefits package that also includes PTO (paid time off), vacation, and sick time. Paid holidays are exactly what they sound like — employees are given the day off and still get paid. They usually, but not always, align with federally observed holidays. Paid holidays are usually given to full-time (35+ hours per week) employees, although some companies give holiday pay to part-time employees as well.

Interestingly, the law doesn’t require employers to pay you for time off on major holidays. 

According to the Fair Labor Standards Act, employers aren't mandated to pay non-exempt employees a premium on a holiday, unless working the holiday would push them into overtime. ("Non-exempt" refers to an hourly-paid worker.) Things such as paid holidays (as well as sick days and vacation time) are granted at the employer's discretion, or negotiated with a union.

What are the eleven federally recognized paid holidays?

There are certain holidays that most employees are generally given off (unless you’re an essential worker or your company stays open on these holidays). Whether you’re given these paid holidays off is also determined by your work schedule — part-time or full-time. There are also different rules determined by states and for non-Federal employees. However, employers in the private sector are not legally required to provide any of these as paid days off, although most do unless they work in industries such as healthcare, manufacturing, retail, food service, or in other “essential” roles that need to be available 24/7.

However, the eleven federally recognized holidays are:

1. New Year’s Day, January 1

2. Martin Luther King’s Birthday, 3rd Monday in January

3. Washington’s Birthday, 3rd Monday in February

4. Memorial Day, the last Monday in May

5. Juneteenth, June 19

6. Independence Day, July 4

7. Labor Day, 1st Monday in September

8. Columbus Day (also observed as Indigenous Peoples Day), 2nd Monday in October

9. Veterans’ Day, November 11

10. Thanksgiving Day, 4th Thursday in November

11. Christmas Day, December 25

If an employee is required to work on one of these holidays, employers will often offer them a “replacement” or “in lieu of” holiday to be taken at their discretion.

Some companies include other holidays in their yearly schedule, usually determined by local observances or employee requests. These generally vary from company to company, based on both employee and company needs. These holidays might include:

• Easter

• Good Friday

• Friday after Thanksgiving

• Christmas Eve

• New Year's Eve

In addition, “floating holidays” are often offered to employees, to allow them to observe other religious holidays if that day generally isn’t already a paid day off. It doesn't have to be taken on the same day every year and is often given to employees as part of their negotiated benefits package.

Benefits of paid holidays

While time away from work is important for both mental and physical health, time off during the holidays can be beneficial to both employees and employers. A major benefit to having paid holidays is the opportunity to celebrate and spend time with family without worrying about losing a day’s pay.

It also helps companies to attract and retain top candidates as employees. Paid time off during the holidays can give the organization a competitive edge in the marketplace, and has come to be expected by many job seekers.

Are there alternatives to paid holidays?

Short answer? Sometimes. While not guaranteed, some employees are given “holiday pay” if required to work on a federally-recognized or religious holiday, such as Christmas, and are compensated with time and a half or even double time (if they’re an hourly-wage employee). Salaried employees, however, are only entitled to holiday pay if it’s in their employment contract, in which case they're legally entitled to it.

If a company doesn’t offer paid holidays, other time-off alternatives might include:

• Flex time allows employees to determine their own scheduled hours, as long as deadlines and productivity goals are met.

• Compressed workweeks, in which employees work extended days in return for one day off per week.

• Telecommuting permits employees to work from home either every day, on certain days, or during the holidays.

• Job sharing, in which two or more employees share one full-time position, each working part-time.

Key takeaways

1. Paid holidays are not required by law, but may be negotiated by the employee as part of their overall compensation package.

2. Paid holidays vary from state to state and by company and industry, but usually include federally observed holidays such as Christmas Day, Thanksgiving, and New Year’s Day.

3. Employers may offer floating holidays so that employees may observe their own religious or cultural events.

4. In lieu of paid holidays, some employers offer flex time, remote work, or compressed schedules.