How does holiday pay work when you are on salary?

The idea that being a salaried employee automatically guarantees paid time off for holidays often runs into the reality of federal regulations and specific company procedures. Holiday pay rules are rarely one-size-fits-all, especially when dealing with exempt staff; they depend heavily on state laws and, most significantly, the written policies established by the employer. ^[2][6]

# Legal Basis

The foundation for most private-sector employment standards in the United States rests with the Fair Labor Standards Act (FLSA). Under the FLSA, there is generally no requirement for employers to provide payment for time not worked, such as holidays, weekends, or vacation days. ^[3][6] Furthermore, the law does not mandate premium pay—like time-and-a-half—for employees who choose or are required to work on a holiday. ^[3] While the federal government sets guidelines for its own workers regarding federal holidays, these do not automatically bind private businesses concerning paid time off provisions. ^[5] Thus, if a holiday is simply designated as a paid day off, that is a benefit extended by the organization, not a federally enforced wage obligation. ^[2][8]

# Salary Status Impact

The distinction between exempt and non-exempt status under the FLSA significantly alters how pay is treated around holidays. ^[4] Non-exempt (typically hourly) employees have clearer rules concerning how much they earn for hours worked, particularly if working on a holiday pushes them into overtime territory for the workweek. ^[4]

For exempt salaried employees, the situation revolves around the salary basis test. ^[6] To maintain their exempt status, these employees must receive their full predetermined salary for any workweek in which they perform any work, unless the absence is for a full day due to sickness, vacation, or personal reasons. ^[6] If an exempt employee works even a single hour on a Tuesday, they must be paid the entire week's salary. ^[6]

This strict requirement creates policy complications for employers regarding holidays. If an employer allows an exempt employee to take a recognized holiday off without using Paid Time Off (PTO), the salary basis is generally upheld because a full day was taken off. ^[6] However, if an employer attempts to deduct pay from an exempt employee for taking only a partial day off for a holiday, this action could jeopardize their exempt classification according to some interpretations of wage and hour rules. ^[1][6] For this reason, many companies mandate that salaried employees use PTO for partial holiday absences or offer the full day off as a blanket policy to ensure compliance with the salary test. ^[6]

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# Employer Policy Control

Because federal law offers minimal requirements for paid holidays, the actual workings of holiday compensation are almost entirely dictated by the specific policies the employer adopts. ^[2][8] Employers decide which days are recognized, whether those days are paid, and how compensation is structured if an employee works the holiday. ^[2][8] For a salaried worker, this means the employee handbook is the most authoritative document on the subject. ^[4]

A useful way to categorize how different companies approach paid holidays for salaried staff, which clarifies the financial arrangement, is by observing their typical responses:

• Standard Coverage: The employee receives their regular weekly salary, and the holiday is simply an expected paid day off, meaning they get no additional cash beyond their normal salary for that specific day. ^[4]
• Premium Addition: The employer pays the regular salary and provides an extra day’s pay equivalent, or grants an additional PTO day to be used later, effectively compensating the employee at double their daily rate for that holiday. ^[9]
• Working Premium: If the salaried employee is required to work on the recognized holiday, the policy might dictate that they receive their standard salary plus compensation for the hours worked, often calculated at a flat rate or time-and-a-half, depending on internal rules rather than federal mandate. ^[9]

Many non-federal holidays, such as the day after Thanksgiving or Christmas Eve afternoon, are entirely at the employer’s discretion; there is no legal requirement for pay or closure on those days. ^[5]

# Working the Holiday

When an employee, salaried or otherwise, is scheduled to work on a day the company officially recognizes as a holiday, the payment structure can vary widely. ^[9] For non-exempt staff, the hours worked must be paid, and depending on the total hours worked that week, overtime rules may apply. ^[4]

For salaried employees, the key question is whether the time worked results in extra pay above and beyond their fixed salary. If the policy is Standard Coverage (as described above), the employee still receives their normal salary for the week, having been paid for the day off and paid for the day worked. However, many organizations offer a form of premium pay for working a holiday, even for exempt staff, as a matter of good employee relations. ^[4] For instance, an employer might offer a salaried worker who works a holiday their regular salary plus an extra day's pay, or compensation equal to time-and-a-half for the hours clocked that day. ^[9]

If a federal holiday falls on a Saturday, federal guidelines often dictate that the preceding Friday is observed, and federal employees receive pay for that day off, a standard that many private companies adopt as a benchmark. ^[5]

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# Pay Value Determination

While federal rules focus on whether you are paid and how your salary structure must be maintained, they don't typically define the value of a paid day off for salaried staff. To approximate the daily rate of pay for a salaried worker to compare holiday benefits, one can divide the annual salary by the approximate number of working days in a year, typically considered 260 (52 weeks times 5 days). ^[7] If an employer provides 10 paid holidays, that is equivalent to two weeks of pay added to the annual salary expectation, assuming the salary already covers the days off without extra compensation. ^[7]

When an exempt salaried employee takes a holiday as unpaid time off, it is critical to understand that they must take the entire day off to avoid triggering the full salary payment requirement for that week. ^[6] This is why using accrued PTO is often the cleanest administrative path for employers when salaried staff take partial days off for non-business reasons, including short holiday observations. ^[6]

When negotiating a new salary or reviewing an offer letter, it is vital to look beyond the base number and ask specifically about the "Holiday Accrual and Observance Policy." An offer stating an annual salary of $80,000 might look identical to another at$80,000, but if the first offers 10 paid holidays off plus your regular vacation time, and the second offers only 5 paid holidays, the effective hourly rate you earn for the hours you do work is significantly higher in the first case. Always clarify if "paid holiday" means "paid salary continues, no extra pay" or "paid salary plus a separate day's pay or premium hours calculation" when you are required to work.