Is Holiday Pay Double Time? Rules, Calculations, and Eligibility

Holiday pay rules, double time vs time-and-a-half, eligibility, and calculations, including Massachusetts and Rhode Island requirements. Guidance for employers and HR on policies, paid holidays, overtime, hourly and salaried staff, and payroll timing.

By Brad Nakase, Attorney

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Table of Contents

1. Introduction

2. Holiday pay: What is it?

3. Time and a half pay

4. Who should be given paid time off?

5. How is holiday pay applied?

6. Does the law require holiday pay?

7. How can a company establish a holiday pay plan?

8. How is holiday pay determined?

9. Do I have to close my business on a holiday?

10. Benefits of Holiday Pay

11. Holiday Pay: Best Practices

12. Final words on the Holiday Pay Policy

Introduction

The strategy of giving your hard-working employees holiday compensation is a good one. It enables them to rest without having to think about their finances. Though there is no mandate requiring you to pay workers in cases of time off, the reality is not that straightforward.

How is it calculated? And how do you ensure that your holiday compensation is not too much or too little?

In this post, we will take you through the steps of calculating holiday compensation, so that you can have more time to enjoy the holidays and less time to work out the figures.

Holiday pay: What is it?

Holiday pay is given to the employees who take leave on public holidays like New Year’s Day, Labor Day, Christmas Eve, Independence Day, and Thanksgiving Day in the US. It is a bonus that will ensure that the employees do not lose their earnings while taking time off during specific holidays.

And yes, one common question always comes up: “Is holiday pay double time?”

Sometimes, yes. But not always. It depends on your company, local rules, and the employee’s contract.

Time and a half pay

Employees working on public holidays could be given time-and-a-half pay. It is the normal wage plus 50% more. The intricacies may sometimes vary greatly. It depends on local laws, the policies of your corporation, and the terms of the working contracts of your workers.

Who should be given paid time off?

Time off, such as holidays, is not paid leave to employees (FLSA regulation). It depends on an agreement between your company and your employees. It can be outlined in hiring or corporate policies.

Full-time employees usually get holiday compensation (both hourly and salaried). While some companies may offer this perk to all of their team members right away, others may need part-time workers to fulfill a specific service requirement before they are eligible. Providing holiday pay to hourly workers also increases employee retention.

But again, “Is holiday pay double time?” Only if the employer decides so.

Note: Since freelancers and independent contractors are not regarded as employees, they usually aren’t entitled to holiday compensation.

How is holiday pay applied?

Employers control how they handle holiday compensation because there are no federal regulations requiring holiday policies. This implies that different businesses can have different policies for holiday pay. Holiday compensation is more prevalent in retail, travel, and hospitality sectors because of their seasonality.

Holiday pay can be handled in several distinct ways, such as:

1. Paid Holidays

Certain holidays are compensated for by some small enterprises. For example, Thanksgiving, Christmas Day, and New Year’s Day.

The employer has the last say over who is entitled to holiday pay. On these kinds of holidays, for example, someone who works full-time would probably be entitled to paid leave. On the other hand, unless they’re working or the employer has a proportionate policy, a part-time and hourly worker is more likely to be denied holiday pay.

2. Extra compensation for working on a holiday

Sometimes an employee has to work on a holiday. Some firms provide extra holiday pay. It is a way to encourage and reward them (like offering double time or time-and-a-half).

Still wondering: “Is holiday pay double time?” It can be, if your company wants to make that gesture.

Does the law require holiday pay?

Federal law does not require holiday pay. This implies that holiday pay is not required to be paid by employers or small company owners. Depending on the contract of employment and corporate policy, your small company may or may not give its employees holiday compensation.

States like Rhode Island & Massachusetts have rules/regulations that are exclusive to some industries.

How can a company establish a holiday pay plan?

It is essential to implement a holiday pay policy. It is regardless of whether you are overseeing hourly workers, salaried staff, or a mix of both. It’s where you establish rules and standards for your company and employees.

Your holiday compensation policy ought to be based on some points.

Requirements for eligibility: These usually cover both full-time and part-time workers. They most likely do not include contractors or temporary workers.
Requesting time off: Indicate any due dates when requesting days off. Make a plan for responding to employees if you receive several requests for the exact same day. Mention how members of the team can use an employee scheduling application, for example, and any situations that could result in a request being turned down. By doing this, holiday schedule management is kept transparent and equitable.
Holiday schedule: Indicate which holidays will be covered by holiday pay. This can comprise officially designated federal holidays. Depending on your region, line of work, or sector, you might include more days.
Calculation of payment: Describe the formula you will use to determine holiday pay. For example, you can easily turn employee timekeeper data into hours and salaries that are prepared for payroll if you’re utilizing a time tracking & payroll software.
Working while on holiday: Indicate how your small business will operate on federal holidays. Does your company shut down completely? Will you need some workers to come to work? How will employees be selected and paid?
Unused vacation time: Some workers may not take leave on a holiday. If your organization permits employees to earn holiday pay, clearly outline the implications. Will they be required to surrender it? Can it be transferred over to the following year?
Exclusions from the policy: Describe any exemptions to your policy regarding holiday compensation. This could involve special guidelines for temporary or shift workers or a period of probation for new hires.

How is holiday pay determined?

Holiday pay calculations may vary for hourly and salaried workers, depending on your small business’s regulations.

1. Salaried Employees: Calculation of holiday pay

Regardless of how many hours they put in, salaried workers are paid a fixed amount annually. They usually receive their regular income during holiday times, whether they’re working or not, because holiday pay is usually included in their annual wages.

Salaried workers may opt to work on a holiday. Employers can occasionally provide additional rewards or bonuses.

2. How hourly workers’ holiday pay is calculated

Hourly workers may have a little more complicated holiday pay calculation because it varies depending on whether they worked during the holiday & the particulars of your business’s holiday pay arrangement.

When calculating holiday pay, take into account your company’s policies as well as whether employees are paid on an hourly or salaried basis. A thorough example for hourly workers is provided here: An employee who works 8-hour shifts and is paid $15 per hour would make $120 each day.

This worker receives $120 on the day if they are not working on a holiday, but are compensated for it. In the event that they work and get “time-and-a-half,” their hourly wage is $22.50, which comes to $180 for a shift of eight hours. The rate is thirty dollars per hour for “double-time” pay, which comes to $240 per day.

“Is holiday pay double time?” Sometimes yes, but most often it’s time-and-a-half.

Hourly workers in Massachusetts & Rhode Island are subject to special holiday pay obligations. In Massachusetts, employees often receive 1.5 times the normal wage on specific holidays. The regulations vary for retail & non-retail establishments. Time-and-a-half pay is mandated in Rhode Island on Sundays & some designated holidays.

Do I have to close my business on a holiday?

With very few exceptions, employers are not required by law to close on holidays, pay employees for holidays, provide them time off, or permit them to accumulate time off when they choose to work on a holiday. Additionally, if an employer decides to shut down on a holiday, they are not required to pay their workers. However, an employer is not allowed to deduct holiday closures from the compensation of exempt employees, with very few exceptions. Non-exempt workers are still required to abide by the legislation concerning minimum wage & overtime compensation.

Kris Kringle is scheduled to deliver goods for his company in California for nine hours during Christmas. He gets to keep his base or straight-time rate of pay for the initial eight hours. He gets 1.5 times the usual rate of compensation for the 9th hour.

The employer is legally required to give holiday compensation if it is specified in a contract of employment or a collective bargaining agreement. Additionally, firms owned or controlled by the federal government, independent institutions or agencies in the executive branch, and some federal workers working in California’s executive branch are exempt.

Employers frequently offer a paid day off on holidays or a premium pay for hours worked on those days. These employers are usually establishments like supermarkets or hospitals that are unable to close on holidays.

Companies that close during the holiday are typically the ones that offer paid time off. To put it another way, the employer gives all or the majority of workers a paid holiday. When deciding whether a worker is eligible for overtime, the hours compensated but not performed are not taken into consideration if the employer so decides.

Additionally, if a worker is unemployed on the day of the holiday, the employer is exempt from paying them for time off. Nonetheless, it should be explicitly stated in the employer’s policy that such compensation is only earned by workers who continue to work on the designated holiday.

Benefits of Holiday Pay

Holiday pay isn’t just a nice gesture. It pays off in small but real ways.

People work better when they feel seen. Giving them paid time off tells them you value their effort. It’s not only about the money, it’s about respect.
When employees can take a break without losing income, they relax. They come back lighter. More focused. You also save yourself the trouble of constant hiring.
If someone chooses to work during holidays, a little extra pay goes a long way. It’s fair. It’s a simple way to say, thanks for showing up. It keeps morale up. It also helps with scheduling because people don’t mind working those shifts anymore.
Then there’s culture. Not everyone celebrates the same days. Some may want Diwali, others Hanukkah, some Juneteenth. Letting people take time for what matters to them builds trust. It shows your company gets it.

Holiday Pay: Best Practices

Perform Background Assessments

Before you claim that this is the way you’ve always done it, you should think about whether your payroll procedures during the holidays could be improved.

Be sure to take into account:

Finances of the company. You may be employed by a Fortune 500 business that has the financial capacity to support giving its employees more paid time off. You might be in charge of a startup that lacks the funds to provide holiday pay to its staff. You need to ensure that you can safely pay your employees when it makes sense. Make sure your pay policies around federal holidays align with your budget. So, “Is holiday pay double time?” Sometimes yes. Sometimes no. But either way, it’s good business.
Culture at work. Does the culture of your workplace align with your wage and benefits plan? If not, it’s time to begin taking that course. For example, a business recognized that its policies needed to better reflect the principles and culture of the business. Before implementing a new PTO plan, they were deliberate about restructuring and even solicited employee input.
Holiday compensation of competitors. Think about your hiring practices and how you’ll draw in top personnel from rivals. When candidates are choosing their future employment, they will notice if your competitors provide the same base wage but three more floating holidays.

Communicate

The payday date should not be appalling, especially when it is a federal holiday. Once you have your plan, communicate your decision to departmental heads and managers, All Hands meetings, HR announcements, and via your employee self-service portal, among others.

To ensure that present and potential employees are always aware of certain procedures. Some companies, for instance, make their paid holiday program publicly available.

Your communication plan should also include a description of your payroll team’s expectations. To guarantee that everyone is paid on time, make sure that the head of payroll is aware that they have to send in payroll early if, for instance, she typically takes extra days around Thanksgiving.

Let the professionals handle the administrative burden

Holiday Pay mistakes are more often than you may imagine. And we understand that processing payroll data requires a significant amount of human work.

Indeed, according to the United States Bureau of Labor Statistics, forty-six percent of hourly workers have had money put into the wrong account, or incorrectly, or late, and 54% of employed Americans have gotten erroneous payments.

Collaborate with a payroll company to make sure the appropriate individuals are paid on time to prevent these mistakes from occurring and recover time.

Final words on the Holiday Pay Policy

The following should be considered when creating your holiday pay policy:

The policy’s objective
Holidays with paid time off that are available, including Saturday and Sunday holidays.
Overall leave requirements for both full-time and part-time workers
Paid vacation time for both full-time and part-time workers
Accommodations for religion, such as floating holidays
Nonexempt workers’ holiday pay, which includes overtime compensation
Holiday compensation for exempt workers
Final compensation, including unpaid earned holidays
Considerations for payday, such as what occurs if it falls on an official holiday

The aim of this article, as it has been stated above, is to give you a general picture of an effective strategy for holiday pay. The finer details, including where and what your company is, what kind of employees you have, etc., will be what sets the best strategy to use in your business. Another factor may include how to treat the workers during paid vacation leave or unpaid leave acquired under the Family and Medical Leave Act (FMLA). At the end of the day, happy employees build stronger companies.

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Is Holiday Pay Double Time? Rules, Calculations, and Eligibility

Introduction

Holiday pay: What is it?

Time and a half pay

Who should be given paid time off?

How is holiday pay applied?

Does the law require holiday pay?

How can a company establish a holiday pay plan?

How is holiday pay determined?

Do I have to close my business on a holiday?

Benefits of Holiday Pay

Holiday Pay: Best Practices

Final words on the Holiday Pay Policy

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