Paid Holidays: A Complete Guide for Employers

The first time I had to decide how many paid holidays to give, I did what most founders do: I guessed. I picked the days that felt obviously right, wrote them in an email, and moved on. Then somebody asked whether the day after Thanksgiving counted, and whether Christmas Eve was a half day, and what happens when the Fourth of July lands on a Saturday, and I realized I had not made a policy. I had made a list of dates and a set of assumptions I had never checked.

This guide is the answer I needed then. It covers whether paid holidays are legally required, how many are standard, exactly which days go into a six, seven, eight, nine, or ten-holiday schedule, how holiday pay actually works, the rule about exempt employees that catches people out, and what the whole thing costs. It is written for the employer making the decision, not the employee looking it up.

The reason it matters more than it seems is that a holiday schedule is one of the most visible parts of your benefits package and one of the cheapest. It shows up in every job posting and every offer conversation, and it costs a fraction of what people assume. Getting it deliberately right, and writing it down, is a small piece of work with an outsized return. That kind of policy tracking is exactly what I built FirstHR to handle. Standard caveat: employment rules vary by state and change, so this is general information rather than legal advice.

What Are Paid Holidays?

Paid holidays are days when a business closes or excuses employees from work and still pays them for the day. They are tied to specific calendar dates, they are separate from vacation and PTO, and in the US private sector they are entirely voluntary. Which days you observe, how many you offer, and who is eligible are all decisions the employer makes.

The distinction from PTO matters more than it sounds. A paid holiday is a day nobody works, chosen by the company and applied to everybody. PTO is a bank of days the employee chooses and requests. That difference has practical consequences: holidays require no approval workflow and no accrual tracking, they close the business rather than thin it out, and they cannot be cashed out. Businesses that fold their holidays into a single PTO bank lose the collective element, which is often the point of a holiday in the first place.

Are Employers Required to Give Paid Holidays?

No. There is no federal law requiring private employers in the US to provide paid holidays, and none requiring premium pay for working on one. This surprises a lot of people, and it is the single most important fact in this guide, because everything else is a business decision rather than a compliance obligation.

Two clarifications follow from that. First, the eleven federal holidays are not a list of days private employers must give. They are the days federal government offices close. A private business can observe all eleven, six of them, or none at all, and none of those choices violates any federal law. Second, offering paid holidays without paying time-and-a-half to people who work them is entirely permissible; the premium is a custom, not a requirement.

None of which means you should offer nothing. It means the decision is a competitive and cultural one rather than a legal one. Given that four in five private industry workers have access to paid holidays, a business offering zero is making a visible statement in a market where the norm is eight. The law gives you freedom here. It does not give you cover.

How Many Paid Holidays Is Standard?

Eight is the national average, and it is the number to benchmark against. The range in practice runs from six at the minimal end to ten or more at generous employers, and it varies meaningfully by industry.

The industry variation is worth knowing before you benchmark. Manufacturing and financial services tend to run at the higher end, around nine days, while leisure and hospitality runs at the lower end, closer to six. Company size matters too: larger establishments offer both higher access rates and more days. That means a small business comparing itself to a national average is comparing itself partly against employers with a thousand people and a benefits department, which is worth keeping in perspective when you set your own number.

Which Days: The Big Six and Beyond

Six holidays are close to universal among US employers who offer any paid holidays at all, and everything else is a tier below them. Knowing the tiers is what lets you build a schedule deliberately rather than by feel.

The Big Six are the floor. Per BLS holiday incidence data, among workers who receive any paid holidays, Thanksgiving and Christmas are received by roughly 97 percent, and New Year's Day, Memorial Day, Independence Day, and Labor Day all sit in the same near-universal band. If you offer paid holidays at all and one of those six is missing, employees will notice, and they will be right to.

The second tier is where the actual decisions live. The day after Thanksgiving is the most commonly added seventh day, and it is popular for a practical reason: almost nobody is productive that Friday anyway, so you are paying for a day you were largely losing regardless. Martin Luther King Jr. Day, Presidents' Day, Juneteenth, and Veterans Day are the other frequent additions, and which you pick says something about your business. The third tier is optional flavor, and floating holidays in particular are worth considering, since they let employees observe things your fixed calendar does not.

What Are the 6, 7, 8, 9, and 10 Paid Holidays?

People search for these lists constantly, and the honest answer is that there is no official list for any of them, because no law defines a holiday schedule for private employers. What exists is convention. Here are the most common configurations at each number, which is what people are actually asking for.

The pattern is worth naming: every schedule is the Big Six plus additions, and the additions come in a predictable order. Day after Thanksgiving usually comes seventh. MLK Day or Christmas Eve usually comes eighth. Juneteenth and Veterans Day tend to arrive when a business moves toward the federal calendar. So rather than memorizing a list, decide how many days you can afford, then add in that order and you will land on a schedule that looks normal to any candidate who reads it.

The 11 Federal Holidays

The eleven federal holidays are the days federal government offices close, and they are frequently confused with a list private employers must follow. They are not. They are a useful reference and a common template, nothing more.

Note what the right-hand column tells you. Six of the eleven are observed almost everywhere, three are common but far from universal, and Columbus Day is observed by relatively few private employers. Juneteenth is the one actively moving: it became a federal holiday in 2021 and private-sector adoption has been climbing since. If you are building a schedule now, it is worth a deliberate decision rather than an omission by default.

How Holiday Pay Actually Works

Holiday pay defaults to the employee's regular rate for a day they did not work. Everything beyond that, the time-and-a-half and double-time people associate with holidays, is voluntary and set by your policy.

The row that catches employers out is the overtime one. A common misconception is that holiday hours automatically count toward overtime, or that working a holiday triggers time-and-a-half. Neither is true federally. Under the FLSA overtime rules, overtime is owed on hours actually worked over 40 in a workweek. Paid holiday hours that nobody worked are generally not counted as hours worked for that calculation unless your policy says they are, which means an employee who takes Thursday as a paid holiday and works 36 hours the rest of the week is not automatically owed overtime.

That said, premium pay for holiday work remains a good idea for a business that needs people to show up on Thanksgiving. It is not required, but it is what makes the ask reasonable, and it is what your competitors are doing. Just be clear in writing about which days qualify, what the multiplier is, and whether it applies to everyone or only to non-exempt staff. For the mechanics of running these calculations, see the guide to calculating holiday pay.

Holiday Pay Days: Two Meanings, Both Answered

People searching for holiday pay days are asking one of two different questions, and both deserve an answer. The first is which days you get paid for, which is the holiday schedule covered above. The second is what happens when payday itself lands on a holiday, which is a payroll timing question with its own answer.

When a scheduled payday falls on a federal holiday, banks are closed and ACH transfers do not settle. The standard practice is to run payroll a business day early so employees are paid on the preceding business day rather than late. Paying early is always safe. Paying late may violate your state's pay frequency and timing laws, which vary and which do not make an exception because a bank was closed.

Exempt vs Non Exempt: The Rule That Trips People Up

The single most consequential technical rule about holidays involves salaried exempt employees, and getting it wrong can put their exempt status at risk. The rule: an exempt employee must receive their full weekly salary for any week in which they perform any work, regardless of a holiday closure.

That means if you close the office on Thursday for Thanksgiving and an exempt employee works Monday through Wednesday, you owe them their entire weekly salary. You cannot dock a day. Making improper deductions from an exempt employee's salary can jeopardize the exemption itself, which is a far bigger problem than the day of pay you were trying to save. The narrow exception is that if you close for a full workweek and the employee performs no work at all, no salary is owed for that week.

Non-exempt employees work under the opposite default. They have no federal entitlement to pay for days not worked, so a paid holiday for an hourly employee is purely your policy. If they work the holiday, they get their regular rate for those hours, and overtime only if they cross 40 hours in the week. The distinction between exempt and non-exempt classification is what determines which set of rules applies, and it is worth confirming that your classifications are actually correct before you rely on them.

What Paid Holidays Cost You

Paid holidays cost far less than most small business owners assume, and the number is knowable rather than a matter of guesswork. Per the BLS National Compensation Survey, paid holidays cost employers an average of about 77 cents per employee hour worked, which works out to roughly 2 percent of total compensation.

The arithmetic is worth doing explicitly, because it is the argument that wins the internal debate. A business with ten employees at an average $60,000 salary has a $600,000 payroll. Two percent of that is $12,000 a year for a full holiday schedule. Losing one of those employees to a competitor with better benefits, and paying to recruit and ramp a replacement, plausibly costs more than that on its own. The holiday schedule is not the expensive part of your benefits package. It is one of the cheapest.

The retention evidence supports treating it that way. A study from Florida Atlantic University and Cleveland State University, using 18 years of data and more than 32,000 observations, found that offering only one to five paid days off produced modest reductions in quitting, while providing six to ten days significantly lowered resignations. The threshold matters: a token amount of paid time off does not move retention, and a real amount does. That is a useful frame for a business deciding whether to go from six holidays to nine.

How Many Should Your Business Offer?

Match the average or beat it, unless your industry genuinely cannot. Eight is the benchmark, and a small business landing below it is making a choice that shows up in every hiring conversation whether or not anyone says so out loud.

Writing a Paid Holiday Policy

An unwritten holiday policy is a series of arguments waiting to happen, because every ambiguity will eventually be tested by a specific situation and resolved in the moment, inconsistently. Write it down once and the questions stop.

The two clauses that prevent the most arguments are the weekend observance rule and the eligibility rule. Those are the ones employees will test first, and having a stated answer converts a potential grievance into a five-second lookup. Your holiday policy belongs alongside the rest of your time-off rules in the employee handbook, so that it is discoverable rather than remembered differently by everyone.

Frequently Asked Questions