To calculate holiday pay for hourly employees, multiply the worker’s base hourly rate by the number of holiday hours, then apply any premium multiplier the employer’s policy provides for hours actually worked on the holiday. Federal law does not require private employers to pay anything extra for holidays, so the formula and the multiplier come from the employer’s handbook or a union contract, not the Fair Labor Standards Act.1U.S. Department of Labor. Fact Sheet 23 – Overtime Pay Requirements of the FLSA
Before running any numbers, confirm two things: that the employee qualifies for holiday pay under the employer’s rules, and whether the employee is being paid for a day off, for hours worked at a premium, or for both.
Paid Day Off: The Basic Formula
When the employer gives a paid holiday and the employee does not work, the math is one line:
Base hourly rate × Holiday hours granted = Holiday pay
An employee earning $20 per hour who receives eight hours of holiday pay gets $160 in gross wages for that day. No work was performed; the amount is added to the paycheck as paid time off.2eCFR. 29 CFR 778.219 – Pay for Forgoing Holidays and Unused Leave
Pro-Rating for Part-Time Employees
Part-time hourly workers usually receive less than a full eight-hour holiday benefit. Two methods are common. The first averages the employee’s daily hours over a recent stretch — typically four to six weeks — and pays that many hours at the base rate. Someone averaging five hours a day at $16 per hour would receive $80 in holiday pay. The second method uses a ratio: an employee working 20 hours in a 40-hour schedule gets 50 percent of the full-time holiday benefit. The handbook controls which method applies.
Working the Holiday: Applying a Premium
When the employee works on the holiday and the policy offers a premium, run two steps:
Step 1: Base hourly rate × Holiday multiplier = Holiday rate
Step 2: Holiday rate × Hours worked = Holiday earnings
At $15 per hour with a time-and-a-half (1.5×) premium, the holiday rate is $22.50, and an eight-hour shift pays $180. If the policy pays double-time (2.0×), the same shift pays $240.
Paid Day Off Plus Premium for Hours Worked
Some employers give both: the paid holiday and the premium rate for the shift the employee actually worked. Add them together. Using the $15-per-hour, time-and-a-half example on an eight-hour shift, that is $120 for the paid holiday plus $180 for the worked shift, or $300 total for the day.
Two Jobs at Different Rates
If an employee holds two positions with the same employer at different hourly rates, the employer may need a weighted average. Add together straight-time earnings from all rates during the workweek and divide by total hours worked at all jobs.1U.S. Department of Labor. Fact Sheet 23 – Overtime Pay Requirements of the FLSA The holiday premium then applies to that blended rate, unless the employer’s policy says the premium attaches only to the rate for the job performed on the holiday.
How the Calculation Interacts With Overtime
Two rules matter, and both change the paycheck when the holiday week runs long.
Unworked Holiday Hours Don’t Count Toward 40
Paid holiday hours where no work is performed are not “hours worked” under federal law. They do not count toward the 40-hour overtime threshold.3U.S. Department of Labor. FLSA Hours Worked Advisor An employee who works 32 hours and takes eight paid holiday hours has 40 hours of pay but only 32 hours worked, and is not owed federal overtime for that week. An employer can voluntarily count holiday hours toward the 40, either by policy or under a union contract; that is more generous than the FLSA requires.
Premium Pay and the Regular Rate
When the holiday premium is at least time-and-a-half, the amount above straight time can be excluded from the employee’s regular rate for overtime purposes and can be credited against overtime the employer owes for that week.4eCFR. 29 CFR 778.203 – Premium Pay for Work on Saturdays, Sundays, and Holidays So an employee who works 45 hours in a week that included an eight-hour holiday shift at time-and-a-half may see the holiday premium satisfy some or all of the five overtime hours.
If the premium is less than time-and-a-half — a flat $2-per-hour holiday bonus, for example — that extra pay has to be folded into the regular rate, which slightly raises the overtime rate on any hours above 40.5eCFR. 29 CFR Part 778 – Overtime Compensation
Confirm Eligibility Before Running the Numbers
Even where holiday pay is offered, individual employees have to meet the policy’s conditions. Two show up most often: a waiting period for new hires, often 60 to 90 days, and a day-before/day-after attendance rule. The attendance rule requires the employee to work the full scheduled shifts on both sides of the holiday; an unexcused absence on either side usually forfeits holiday pay for that date.
The attendance rule can apply during FMLA leave, but only if the employer applies it the same way to non-FMLA absences. An employer cannot treat FMLA leave more harshly than other leave. If the policy excuses employees who use vacation time from the day-before/day-after requirement, it also has to excuse FMLA-qualifying absences.6U.S. Department of Labor. FMLA Frequently Asked Questions
A narrow point on state law: a small number of states require premium pay for certain employees on designated holidays, and those laws have been shrinking. Most private-sector hourly employees will find the answer in the employer’s written policy, not in a state statute.
Withholding on the Amount You Calculated
Holiday pay is wages, so it is subject to federal income tax, Social Security, and Medicare like any other paycheck. A standard paid day off — essentially normal pay for a day the employee did not work — is withheld from like regular wages using the W-4 on file. Holiday premium pay that is paid separately can be treated as supplemental wages, which the employer can withhold at a flat 22 percent federal rate or combine with regular wages and withhold on the total.7Internal Revenue Service. Publication 15 (Circular E), Employer’s Tax Guide A larger-than-expected withholding on a paycheck that includes a holiday premium is usually the flat supplemental rate at work.
Check the Paystub
After the holiday pay period, review the paystub to confirm the hours, the rate, and the multiplier match what the policy promises. Most payroll systems separate holiday pay onto its own line with a distinct earnings code — often “HOL” for a paid day off and “HWK” or a similar code for premium hours worked on the holiday. If a number looks off, raise it with payroll before the next pay cycle closes; corrections are easier the sooner the request goes in.