What Are Employer-Paid Holidays?

Definition and Examples of Employer-Paid Holidays

Young woman takes a selfie with family and friends during a holiday celebration.
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An employer-paid holiday is paid time off that allows an employee to observe a holiday if they choose. Typically, employer-paid holidays are part of a larger compensation package that also includes other paid time off, such as vacation days and sick days.

Learn more about employer-paid holidays and the most common paid holidays in the U.S.

What Are Employer-Paid Holidays?

Employer-paid holidays are days off with pay given to employees and traditionally associated with federally observed holidays. They are not required by law.

The Fair Labor Standards Act (FLSA) does not mandate that employers pay employees for time not worked, such as vacations or holidays. Paid holidays, paid vacation, and paid sick leave are determined by the employer (or negotiated by the employee's representative, such as a union).

How Do Employer-Paid Holidays Work?

An employee with paid holidays typically receives a day off with pay for certain holidays, most often those recognized by the federal government. According to the U.S. Bureau of Labor Statistics, 78% of U.S. civilian workers had access to paid holidays in 2019. Workers in private industry average eight paid holidays per year.

Paid holidays are a normal part of a compensation and benefits package offered by employers to attract and retain employees. These holidays are usually listed in an employment offer letter and appear in an employee handbook.

The most common paid holidays in the U.S. are:

  • New Year's Day
  • Memorial Day
  • Independence Day
  • Labor Day
  • Thanksgiving Day
  • Christmas Day

The federal government recognizes the above holidays as well as the following:

  • Martin Luther King, Jr. Day
  • Washington's Birthday
  • "Columbus Day" (also observed as Indigenous Peoples Day)
  • Veterans' Day

Other organizations may also add the following holidays to their schedule:

  • Easter
  • Good Friday
  • Friday after Thanksgiving
  • Christmas Eve
  • New Year's Eve

Sometimes, a company may offer a floating paid holiday that employees can take as needed. Other companies offer paid time off for the employee's birthday or for Election Day.

Floating holidays give employees the opportunity to use paid time off to celebrate religious holidays, especially if the holiday isn't commonly a paid holiday. Employees can also use PTO, personal days, or paid vacation days to get paid for religious commemorations and family time off.

Benefits of Employer-Paid Holidays

Increasingly, competitively paid holidays and other time-off benefits are becoming crucial to an employer's ability to attract the best employees who have skills that are critical for the operation of the business.

Paid holidays may be negotiated by employees who have an employment contract. Senior-level employees with a contract are likely to have come from positions in other organizations where their seniority gave them the maximum paid holidays and vacation time.

Senior-level employees are unlikely to settle for less time off when accepting a new position. In fact, if an employer doesn't offer equivalent paid vacation and holiday time, it may be a deal-breaker for the prospect—even if they don't typically use all of the time available.

Employer-paid vacation time can differ between exempt and non-exempt employees. Exempt employees are expected to work whatever hours are necessary to complete a job. They may have more flexibility in their schedule and less supervision, as well. These employees are exempt from the overtime provisions of the Fair Labor Standards Act (FLSA).

Exempt employees in professional, technical, or managerial positions (such as software developers, HR staff, controllers, or marketing staff) may expect paid holidays to accompany their employment. Such employees are unlikely to accept positions in companies that don't offer paid time off for holidays. 

Nonexempt employees aren't exempt from the provisions of the FLSA. They're typically required to track their time and be paid for overtime work. They may be less likely to have paid holidays, or they may receive fewer paid holidays than their exempt or salaried colleagues. Part-time employees may receive some paid holidays, depending on the employer: For example, 79% of part-time employees received Labor Day as a paid holiday in 2018.

Contract employees or consultants do not receive paid holidays—and they don't expect them. But, a contract worker who is employed by the contracting company, not the employer whose job site they work in, may receive paid holidays from the contracting company.

Alternatives to Employer-Paid Holidays

Some employers offer holiday pay for employees who work on a holiday when the office would normally be closed. Typically holiday pay would be expressed as a premium, such as time-and-a-half or double-time pay. Other employers may offer a day off without pay.

Key Takeaways

  • Employer-paid holidays are days off with pay given to an employee as part of their compensation. They're not required by law and may be negotiated.
  • Giving employees paid holidays allows them to observe a holiday if they choose.
  • Employer-paid holidays vary from company to company but typically include major federally observed holidays such as New Year's Day and Christmas Day.

Article Sources

  1. U.S. Department of Labor. "Vacation Leave." Accessed June 19, 2020.

  2. U.S. Bureau of Labor Statistics. "Employee Benefit Survey." Accessed June 19, 2020.

  3. U.S. Bureau of Labor Statistics. "Holiday Profiles." Accessed June 19, 2020.

  4. OPM.gov, "Fact Sheet: Federal Holidays - Work Schedules and Pay," Accessed June 19, 2020.

  5. SHRM. "SHRM Survey Findings: 2017 Holiday Schedules," Page 4. Accessed June 19, 2020.