Holiday Pay Policy
Holiday Pay Policy template for defining observed holidays, floating holidays, eligibility, and premium pay rules. Use it to set clear pay treatment, approval steps, and exceptions before disputes start.
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Overview
This Holiday Pay Policy template sets the rules for observed holidays, floating holidays, eligibility, and any premium pay treatment. It is built for employers that need one place to define which holidays are paid, who qualifies, how requests are approved, and how payroll should code holiday hours.
Use it when you want to reduce confusion around holiday schedules, especially across multiple departments, shifts, or locations. It is also useful when you offer floating holidays, require advance notice, or pay a premium for employees who work on a holiday. The template helps you separate paid time off rules from overtime and leave rules so managers do not improvise at the point of scheduling.
Do not use this template as a substitute for state wage-and-hour review where local law may affect premium pay, rest periods, or holiday scheduling practices. It is also not the right tool if you need a union CBA holiday article, a leave policy, or a full PTO policy. If your workforce includes exempt and nonexempt employees, part-time staff, seasonal workers, or employees on FMLA or other protected leave, the eligibility section should be customized carefully so the policy matches actual payroll practice and avoids inconsistent treatment.
Standards & compliance context
- Holiday pay is generally a policy choice under the FLSA, but any premium pay, overtime, and hours worked on a holiday must still be tracked correctly for nonexempt employees.
- If holiday scheduling affects leave, the policy should not interfere with rights under the FMLA or ADA, including approved leave and the interactive process for reasonable accommodation.
- Eligibility and discipline language should be applied consistently under Title VII, the ADEA, and EEOC guidance to avoid disparate treatment across protected classes.
- If employees discuss holiday scheduling, pay practices, or staffing concerns together, the policy should not chill concerted activity protected by the NLRA.
- State law can change the analysis for premium pay, rest periods, sick leave, or wage statement coding; California employees and other state-specific groups should be reviewed separately.
General regulatory context for orientation only — verify current requirements with counsel or the relevant agency before relying on this template for compliance.
What's inside this template
Purpose
Explains why the policy exists and what pay and scheduling problems it is meant to prevent.
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This policy establishes the company’s rules for observed holidays, floating holidays, holiday pay eligibility, and premium pay for holiday work. The policy is intended to provide consistent administration, support workforce planning, and ensure compliance with applicable wage and hour and equal employment laws. **Legal note:** Federal law does not require private employers to provide paid holidays. Where holiday pay is offered, it must be administered consistently and in a manner that does not discriminate on the basis of a protected class under **Title VII of the Civil Rights Act of 1964** and related **EEOC** guidance.
Scope
Defines which employees, locations, and jurisdictions the holiday rules apply to.
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This policy applies to all employees of the company unless a written exception is approved by Human Resources and the policy holder. **Applicable jurisdictions:** United States. State-specific requirements, if any, will be applied as carve-outs and will supersede this policy where required by law. **Applicable roles:** All employees, unless a role-specific exception is documented in an offer letter, collective bargaining agreement, or written employment agreement.
Definitions and Eligibility
Clarifies the terms and employee groups that determine who qualifies for holiday pay or floating holidays.
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### Observed holidays The company will publish its annual list of observed holidays before the start of each calendar year. The list may include federal holidays, company-designated holidays, or both. ### Eligibility for holiday pay Holiday pay eligibility is based on the employee’s classification and status on the scheduled workday before and after the holiday, unless state law requires a different rule. Eligible employees generally include: - Full-time regular employees - Part-time employees, if specifically designated as eligible in the offer letter or local addendum - Non-exempt employees, subject to timekeeping and attendance requirements Ineligible employees generally include: - Temporary employees - Independent contractors - Interns, unless specifically stated otherwise - Employees on unpaid leave, unless required by law or approved in writing ### Floating holidays Floating holidays may be granted to eligible employees as a separate paid benefit. Unless otherwise stated, floating holidays must be used within the calendar year and are not paid out at separation, subject to applicable state law.
Policy Rules
States the actual holiday calendar, pay treatment, and conditions for premium pay or paid closure days.
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### 1. Company-observed holidays The company will designate the holidays it observes each year. Observed holidays may vary by location, business unit, or operational need. ### 2. Holiday pay eligibility requirements To receive holiday pay, an employee must generally: - Be actively employed on the day before and the day after the holiday - Be in good standing and not subject to a documented warning for attendance abuse related to holiday scheduling - Meet any minimum service requirement stated in the employee handbook or local addendum - Comply with timekeeping and attendance procedures ### 3. Floating holiday use Eligible employees may request floating holidays in advance through the company’s leave request process. Approval is subject to staffing needs, business continuity, and manager review. ### 4. Premium pay for holiday work If the company offers premium pay for working on a holiday, the amount and method of calculation will be stated in the annual holiday schedule or employee handbook addendum. Unless otherwise required by law or a written agreement, premium pay is discretionary and does not apply to all roles. ### 5. FLSA overtime treatment Holiday pay and premium pay will be administered in accordance with the **Fair Labor Standards Act (FLSA)**. For non-exempt employees, holiday hours that are not actually worked generally do not count as hours worked for overtime purposes unless required by law or company policy. Any premium pay that qualifies as overtime must be calculated using the employee’s regular rate of pay and applicable overtime rules. ### 6. Leave interactions Holiday pay may be affected by approved leave, including FMLA leave, unpaid leave, or other protected leave. The company will apply leave and holiday rules consistently and will not interfere with protected rights under the **FMLA**, **ADA**, or other applicable laws.
Procedure
Shows the step-by-step process for requesting, approving, coding, and recording holiday time.
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### Holiday schedule publication 1. HR will publish the annual holiday schedule before the start of the calendar year. 2. The schedule will identify observed holidays, any floating holiday allocation, and any premium pay rules. 3. Location-specific or state-specific exceptions will be documented separately. ### Requesting a floating holiday 1. The employee submits a request through the standard time-off system. 2. The manager reviews the request based on staffing and operational needs. 3. HR may deny or reschedule requests made during peak business periods, provided the decision is applied consistently. ### Holiday work approval 1. Managers must obtain approval before assigning holiday work when operationally feasible. 2. Non-exempt employees must accurately record all hours worked. 3. Any premium pay or overtime must be reviewed by Payroll before processing. ### Disputes and accommodations If an employee believes a holiday rule conflicts with a sincerely held religious practice or other protected need, the employee should contact HR to begin the interactive process. The company will consider reasonable accommodation unless doing so would create undue hardship.
Roles and Responsibilities
Assigns ownership for HR, payroll, managers, and employees so the policy can be administered consistently.
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### HR / Policy holder - Maintain the annual holiday schedule - Review eligibility rules and state-specific carve-outs - Coordinate with Payroll on premium pay and overtime treatment - Ensure consistent administration and recordkeeping ### Managers - Approve or deny floating holiday requests based on business needs - Ensure holiday staffing decisions are applied consistently - Escalate accommodation requests to HR promptly ### Payroll - Process holiday pay, floating holiday pay, and premium pay accurately - Confirm FLSA treatment for non-exempt employees - Retain payroll records in accordance with company retention requirements ### Employees - Review the holiday schedule and submit requests on time - Accurately report hours worked and leave taken - Notify HR of any request for religious accommodation or other protected leave interaction
Compliance, Exceptions, and Discipline
Explains how exceptions are approved and how violations or misuse are handled.
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### Compliance The company will administer this policy in a manner consistent with applicable federal, state, and local law, including the **FLSA**, **Title VII**, **EEOC** guidance, and any applicable leave or wage payment laws. ### State-specific carve-outs - **California employees:** Holiday pay, meal/rest break, wage statement, and final pay rules will be applied in accordance with California law where applicable. - **New York employees:** Any applicable wage payment or leave-related requirements will be applied in accordance with New York law. - **Illinois employees:** Scheduling and rest-period requirements will be applied in accordance with applicable Illinois law where relevant. - **Washington employees:** Holiday pay interactions with paid sick leave or other protected leave will be administered consistently with Washington law. ### Exceptions Any exception to this policy must be approved in writing by HR and the policy holder. ### Discipline Failure to follow holiday scheduling, timekeeping, or approval procedures may result in corrective action, up to and including a documented warning, a PIP, or termination, depending on the severity and frequency of the violation.
Review and Revision
Sets the effective_date, version control, and annual review_frequency so the policy stays current.
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This policy will be reviewed at least annually and updated as needed to reflect changes in business operations, payroll practices, and applicable law. The policy holder is responsible for initiating review, documenting revisions, and communicating material changes to affected employees.
How to use this template
- 1. Enter the policy holder name, effective_date, version, applicable_jurisdictions, applicable_roles, and review_frequency before publishing the policy.
- 2. List each observed holiday and floating holiday rule in the Policy Rules section, including eligibility, notice requirements, and whether unused floating holidays expire.
- 3. Define the request and approval workflow in the Procedure section so employees know when to submit requests and managers know who can approve or deny them.
- 4. Assign payroll and HR responsibilities for coding holiday hours, tracking eligibility, and resolving disputes before the holiday schedule is released.
- 5. Review exceptions, discipline, and any state-specific carve-outs annually, then update the policy and communicate changes before the next holiday cycle.
Best practices
- State whether holiday pay is based on the calendar holiday, the observed holiday, or the employee's scheduled workday.
- Separate eligibility rules for exempt, nonexempt, part-time, seasonal, and probationary employees so payroll does not guess.
- Require employees to request floating holidays in advance and specify whether managers may deny requests for staffing coverage.
- Explain how holiday pay interacts with overtime, shift differentials, and premium pay so nonexempt hours are coded correctly.
- Document whether employees on unpaid leave, final warning, or inactive status are eligible for holiday pay before the holiday arrives.
- Use one approval path for exceptions and require written approval from HR or the policy holder, not informal manager promises.
- Coordinate the policy with the timekeeping system so holiday hours, worked hours, and PTO are recorded under separate codes.
What this template typically catches
Issues teams running this template most often surface in practice:
Common use cases
Frequently asked questions
What does this Holiday Pay Policy template cover?
It covers which holidays the policy holder observes, who is eligible for holiday pay, how floating holidays are requested, and when premium pay applies. It also includes the procedure for scheduling, approval, and payroll coding so the rules are usable, not just descriptive. The template is meant to be customized for your jurisdiction and workforce mix.
Who should use and administer this policy?
HR usually owns the policy holder version, with payroll handling pay coding and managers handling scheduling and approval. If your organization has multiple locations, local leaders should confirm site-specific holiday observance and staffing needs. The roles and responsibilities section is designed to make that handoff clear.
How often should holiday pay rules be reviewed?
Review the policy annually and whenever you add a new location, change payroll systems, or update your holiday calendar. Annual review helps catch state law changes, union requirements, and benefit changes before the next holiday cycle. The template includes a review and revision section for that cadence.
Does this template address federal and state law differences?
Yes, it is written to be aligned with federal wage-and-hour principles under the FLSA while leaving room for state-specific rules. Holiday pay is often not required by federal law, but premium pay, overtime, and meal/rest rules can vary by state and local policy. California employees, for example, may be affected by state wage order and overtime rules even when holiday pay itself is discretionary.
What are the most common mistakes this policy helps prevent?
The most common issues are vague eligibility rules, inconsistent approval of floating holidays, and payroll errors when a holiday falls during leave or overtime weeks. Another frequent problem is promising holiday pay without defining whether employees must work the scheduled day before and after the holiday. This template forces those rules into one place.
Can this be customized for exempt, nonexempt, and part-time employees?
Yes. The definitions and eligibility section is meant to distinguish exempt, nonexempt, full-time, part-time, temporary, and seasonal employees if your business treats them differently. You can also add service-length requirements, probationary-period rules, or location-based eligibility where permitted by law.
How does this policy work with payroll and timekeeping systems?
The procedure section can be mapped to payroll codes for observed holidays, floating holidays, and premium pay, and to timekeeping rules for worked holidays. It is helpful to align the policy with your HRIS, payroll, and scheduling tools so approvals and pay treatment are consistent. That reduces manual corrections and disputed pay.
Should holiday pay be tied to attendance or performance?
It can be, but the policy should state the conditions clearly and apply them consistently. Many employers require employees to be actively employed on the holiday and not on an unpaid leave or final warning status, but the exact rule should be reviewed for fairness and state-law compliance. Avoid ad hoc exceptions that create unequal treatment.
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