Holiday overtime pay: what the law requires and how to calculate it

A holiday falls in the middle of the week, part of the team works it, and the rest gets a paid day off. Payroll now has to decide who earns extra and how much. Under the federal Fair Labor Standards Act (FLSA), holiday overtime pay is not required: no federal rule says that work on a holiday must be paid at time and a half or double time. What the FLSA does require is overtime at 1.5 times the regular rate for hours actually worked beyond 40 in a workweek, and paid holiday hours that nobody works do not count toward those 40 hours.

Any extra pay for working on Thanksgiving, Christmas or another holiday therefore comes from your own policy, an employment contract, a union agreement, or a state law. Below are three worked calculations and the state rules that change the answer.

What is holiday overtime pay?

People use “holiday overtime pay” for three different things, and mixing them up is where payroll errors start:

When an employer advertises “holiday overtime,” it usually means holiday premium pay. When a week with a holiday pushes someone past 40 worked hours, true FLSA overtime applies on top of, or partly offset by, that premium. The calculation section below shows both cases.

Does federal law require holiday overtime pay?

No. The U.S. Department of Labor (DOL) states that the FLSA “does not require payment for time not worked, such as vacations or holidays (federal or otherwise)” and treats these benefits as a matter of agreement between employer and employee. The same logic applies to work on a holiday: the FLSA has no holiday rate, so a holiday shift is paid like any other shift unless your policy says otherwise.

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Federal holidays are the days when federal government offices close. Private employers are not obliged to close on them or to pay extra for them. The U.S. Office of Personnel Management (OPM) lists 11 federal holidays for 2026:

Paid holidays are a different list: the days your company chooses to pay for. Many employers take the federal list as a base and add days such as Christmas Eve or the day after Thanksgiving, while others drop some federal days. Whatever list you pick, write it down, because it drives both holiday pay and any holiday premium.

Do holiday hours count toward overtime?

It depends on whether the employee worked those hours. A paid holiday that the employee did not work does not count. Under 29 CFR 778.218, pay for idle time such as a holiday is not compensation for hours of employment, so it is left out of the regular rate and none of it can be credited toward overtime owed. The 40 hour count includes only hours actually worked.

Hours worked on a holiday are different: they count like any other hours worked, and if they push the week past 40, overtime is due on the excess. So a week with 32 hours worked plus an 8 hour paid holiday gives the employee 40 paid hours and zero overtime hours. A week with 44 hours worked plus an 8 hour paid holiday gives 4 overtime hours, not 12. Employers can choose to count holiday hours toward overtime as a policy perk, but the FLSA does not require it.

Is overtime on a holiday double time?

Not under federal law. The FLSA overtime rate is “not less than one and one-half times the regular rate” (29 U.S.C. 207(a)), whether or not the day is a holiday. Double time on a holiday exists only when an employer policy or a collective bargaining agreement promises it. California is the main state exception for double time in general, but its trigger is hours, not holidays: more than 12 hours in a workday, or more than 8 hours on the seventh consecutive workday of a workweek, according to the California Division of Labor Standards Enforcement.

How to calculate holiday overtime pay

The calculation always starts from the same two numbers: the hours actually worked in the workweek and the employee’s regular rate. The three examples below use a nonexempt employee earning $20 an hour in Thanksgiving week, with no state daily overtime rules. You can check other numbers with the actiTIME overtime calculator.

Holiday worked, no holiday premium

The company pays no holiday premium. The employee works 8 hours on Thanksgiving and 48 hours in total.

The holiday changes nothing here. Overtime is owed because the week went past 40 worked hours.

Holiday worked at time and a half

The company pays time and a half for holiday work. The employee works 8 hours on Thanksgiving and 40 hours on the other days, 48 hours in total.

Under 29 CFR 778.203, a premium of at least 1.5 times the normal rate paid for work on a holiday can be treated as an overtime premium. It stays out of the regular rate and can be credited toward the overtime the FLSA requires. In this example, the holiday premium already covers the 8 overtime hours, so no extra overtime is owed. This answers a common question: holiday premium pay and FLSA overtime do not automatically stack. If your policy pays both on the same hours, that is your choice, not a legal minimum.

Paid holiday not worked

The employee takes Thanksgiving off with 8 hours of holiday pay and works 40 hours on the other four days.

The employee is paid for 48 hours but worked 40, so no overtime is due under federal law. This is the situation behind the question “does holiday pay count towards overtime”: in most cases, it does not.

Holiday seasons also bring commissions and bonuses. Nondiscretionary bonuses, such as a promised bonus for working through December, are part of the regular rate under 29 CFR 778.211, which changes the overtime rate for the weeks they cover. The overtime calculation guide walks through regular rate math with bonuses.

State rules on holiday and overtime pay

Many states, such as Texas and Arizona, follow the federal rule. A few add rules that matter in holiday weeks, either through a holiday premium or through daily overtime that long holiday shifts can trigger.

Sources: Rhode Island Department of Labor and Training, legal holidays; Mass.gov, blue laws and working on Sundays and holidays; California DLSE overtime FAQ; Alaska Wage and Hour FAQ; Colorado Division of Labor Standards and Statistics; Nevada Labor Commissioner. For every other state, check the actiTIME guide to overtime laws by state.

Daily overtime rules mean that rescheduling a holiday week is not always neutral. In a state with weekly overtime only, an employer can keep a busy holiday week under 40 hours by giving shorter days later in the same workweek. In California or Alaska, a single 10 hour holiday shift creates 2 overtime hours even if the weekly total stays under 40.

How to write a holiday overtime pay policy

Because federal law leaves holiday pay to agreement, a written policy is what employees and payroll will rely on. Cover these points:

1. List the paid holidays.

   Name each day, including floating holidays, and say what happens when a holiday falls on a weekend.

2. Say who is eligible.

   Spell out whether part time, seasonal and new employees get holiday pay, and whether exempt staff are covered by the premium.

3. Set the holiday work rate.

   State the premium (for example 1.5x or 2x). If you want to credit it toward overtime, make it at least 1.5 times the normal rate.

4. Decide whether paid holidays count toward overtime.

   The FLSA does not require it. If you choose to count them, write that down so payroll applies it the same way every time.

5. Record holiday hours separately.

   Payroll needs to see which hours were worked on the holiday and which were paid but not worked, or the overtime math in the examples above cannot be checked.

Tracking holiday hours and overtime costs

Every calculation in this article depends on clean records of hours worked per day and per week. In actiTIME, you add company holidays to the corporate calendar and set work schedules company wide or per user, so a holiday shows up as a day off in the schedule. Employees log work time and leave time in their timesheets, and overtime is calculated automatically or entered manually, based on per user settings that follow state and company rules.

Each user can have separate regular, overtime and leave rates. The Time Balance and Overtime Report shows worked time against scheduled hours and overtime across the team, and the Cost of Work Report shows what those hours, including overtime and leave, cost you. That makes it easier to see before the next holiday season how much last year’s holiday weeks really cost.

FAQ

Does holiday pay count towards overtime?

Not under federal law. Pay for a holiday the employee did not work is not compensation for hours worked (29 CFR 778.218), so those hours are left out of the 40 hour overtime count. Hours actually worked on a holiday do count. An employer may count paid holidays toward overtime as a policy, but it is not required.

Is holiday pay time and a half?

Only if your employer, contract or state law says so. The FLSA requires no holiday rate. Rhode Island is one state that generally requires at least 1.5 times the normal rate for work on Sundays and state holidays.

If you work overtime on a holiday, is it double time?

Not by federal law. Federal overtime is at least 1.5 times the regular rate. Double time applies only if a policy or union agreement promises it, or when a state daily rule applies, such as California’s double time after 12 hours in a workday.

Can you get holiday pay and overtime in the same week?

Yes, if you work more than 40 hours in a week that also includes a paid holiday. You receive holiday pay for the day off and overtime for the hours worked beyond 40. The holiday hours themselves do not add to the overtime count.

Do holiday premium pay and overtime stack?

Not automatically. A holiday premium of at least 1.5 times the normal rate can be credited toward the overtime the FLSA requires (29 CFR 778.203), so the same hours are not paid twice. Rhode Island is an exception for employers outside retail, which pay the holiday premium and overtime separately.

Do exempt employees get holiday overtime pay?

The FLSA overtime rules do not apply to exempt employees, so they have no federal right to overtime for holiday weeks. An employer can still offer them a holiday premium or extra time off. See who is exempt from overtime for the tests.

What is the new overtime rule for 2026?

In May 2026, the DOL published a technical amendment that removed the vacated 2024 overtime rule from the regulations. The salary level for the white collar exemptions is $684 a week ($35,568 a year), and the DOL salary levels page lists the same figure. Separately, for tax years 2025 through 2028, workers can deduct the FLSA required overtime premium, up to $12,500 ($25,000 for joint filers), according to the IRS. A holiday premium paid only under company policy is not FLSA required overtime.

Get holiday pay right before the season starts

Most holiday pay disputes come down to whether the employee really worked more than 40 hours and whether a policy or state rule adds a premium on top. Daily records settle both. Start a free 30-day trial of actiTIME, or book a demo if you want a walkthrough.