Free company holiday policy template for US small business. Six versions: office, retail, holiday pay, floating, religious, and minimal. Download as DOCX.
Six free company holiday policy templates for US small business: a standard office policy, an open-on-holidays retail version, a holiday pay policy, a floating holiday policy, a religious accommodation policy, and a minimal small-business version. With the 2026 federal holidays and state pay rules. Download as DOCX, no signup.
A company holiday policy sets which days your business observes as paid holidays, who is eligible, and how pay works for anyone who works on one. Since federal law sets no default, your written policy is what defines the benefit and keeps it consistent. Paid holidays are common but not universal: the Bureau of Labor Statistics reports that about 81 percent of private industry workers have access to paid holidays, averaging around 8 days. In US usage, a holiday policy is about company days off, not annual vacation, which is what the word means in British English.
These six templates cover the range: a standard office policy, an open-on-holidays retail version, a holiday pay policy, a floating holiday policy, a religious accommodation policy, and a minimal small-business version. Each downloads as a Word document, free and without an email, with the 2026 federal holidays and the state pay rules generic templates skip. Because holiday sits next to other time off, this pairs with your vacation policy and your time off policy.
TL;DR
A company holiday policy sets which days are paid holidays, who is eligible, how holiday pay works, and how to handle weekend holidays, floating holidays, and religious accommodation, ending with a signed acknowledgment. Download six free templates as DOCX: standard office, retail open-on-holidays, holiday pay, floating, religious, and small-business. No federal law requires paid holidays or premium pay, but Title VII requires religious accommodation and a few states (like Rhode Island) mandate holiday premium pay. This is general information, not legal advice.
What a Company Holiday Policy Is
A company holiday policy is a written document that sets which days a business observes as paid holidays, who is eligible for holiday pay, how pay works for employees who work on a holiday, and how related situations are handled, such as a weekend holiday or a holiday during vacation. It often also covers floating holidays and religious accommodation.
It is an employer-side document, usually a section of the employee handbook, written by HR or, in a small business, the owner or a manager. Its value is clarity and consistency: since federal law sets no default, the policy defines the benefit and applies it the same way to everyone. It works alongside your written paid holidays guide and the rest of your time-off policies.
Paid Holidays Are Common but Not Required
About 81 percent of private industry workers have access to paid holidays, with an average of 8 paid holidays (U.S. Bureau of Labor Statistics). No federal law requires private employers to provide paid holidays or premium pay; the U.S. Department of Labor treats these as a matter of agreement between employer and employee. This is general information, not legal advice.
Holiday vs Vacation vs PTO
These three get conflated, and keeping them straight is the first step to a clean policy. A holiday is a fixed, company-wide day off tied to the calendar, the same date for everyone. Vacation is individually scheduled time an employee requests and takes when they choose. PTO is often a single combined bank an employee draws from for any reason.
A holiday policy governs the calendar-based company days; a vacation or PTO policy governs individually scheduled time. Keeping them in separate documents keeps eligibility and pay rules clear. For the individually scheduled side, this holiday policy pairs with your vacation policy, and the PTO versus vacation overview explains where the two differ.
What to Include
A complete holiday policy covers four groups: the holidays themselves, eligibility, pay, and compliance. The four groups below are the consensus set that strong holiday policies share.
The holidays
Observed paid holidays list
Weekend-observance rule
Holidays during PTO or leave
Eligibility
Full-time versus part-time
Temporary and contract workers
When eligibility begins
Pay
Holiday pay for time off
Premium pay for working
FLSA overtime interaction
Compliance
Religious accommodation
State premium-pay rules
At-will disclaimer and acknowledgment
The areas small businesses most often skip, and most need, are the pay-interaction rules and the compliance section: how premium pay and overtime combine, and how religious accommodation and any state rule apply. Every template here builds those in.
Which Template Should You Use?
Start with the standard policy if your business closes on holidays, or the retail version if you stay open. Add the holiday pay policy for detailed pay mechanics, the floating holiday and religious versions for flexibility and compliance, and the small-business version for a minimal starting point.
Standard Company Holiday Policy
Office, closed on holidays
The default. Lists observed paid holidays, eligibility, weekend-observance rules, and how a holiday during PTO is handled. For businesses that close on holidays.
Open-on-Holidays Policy
Retail and hospitality
For businesses that stay open. Covers coverage and minimum staffing, pay for working a holiday, and whether shifts are voluntary or required. Includes the state right-to-decline note.
Holiday Pay / Premium Pay Policy
Pay mechanics
A pay-focused version: who is eligible, regular versus premium pay for working a holiday, exempt versus non-exempt, and how holiday pay interacts with FLSA overtime.
Floating Holiday Policy
Employee-chosen days
Paid days off the employee chooses, for a holiday you do not observe or a personal, cultural, or religious day. Covers grant timing, carryover, and religious use.
Religious Accommodation Policy
Title VII, post-2023
The religious and cultural accommodation version, written to the current undue-hardship standard. Covers the request process and the range of possible accommodations.
Small-Business Policy
5 to 10 employees
A short, plain-language version for a small team where the owner handles this directly, with minimal bracketed fields and a plain religious-accommodation note.
Match the Template to How You Operate
Business closes on holidays: the Standard policy. Business stays open: the Open-on-Holidays retail version. Need detailed pay rules: the Holiday Pay policy. Want employee-chosen days: the Floating Holiday policy. Handling religious time-off: the Religious Accommodation policy. A small team wanting one short document: the Small-Business version. Whichever you pick, set your holiday list, address religious accommodation, check your state's rules, and collect a signed acknowledgment.
6 Free Holiday Policy Templates
Download all six as a single Word document or copy individual templates. The standard and small-business versions are the core; the retail version handles staying open; the holiday pay version handles pay mechanics; and the floating and religious versions handle flexibility and accommodation. Fill in your holiday list, eligibility, and pay rules, and have counsel review before adopting.
Download All 6 Holiday Policy Templates
A standard office policy, an open-on-holidays retail version, a holiday pay policy, a floating holiday policy, a religious accommodation policy, and a small-business version. All in one DOCX.
Template 1: Standard Company Holiday Policy
Lists observed paid holidays, eligibility, weekend-observance rules, and how a holiday during PTO is handled. For businesses that close on holidays.
Standard Company Holiday Policy (Office / Closed on Holidays)
HOLIDAY POLICY
[Company Name]
Effective date: _ Policy owner: __
1. PURPOSE
This policy describes the paid holidays [Company Name] observes and how holiday
pay works. It does not create a contract and does not change the at-will nature
of employment. [Company Name] may modify this policy at any time.
2. OBSERVED PAID HOLIDAYS
[Company Name] observes the following paid holidays each year:
•New Year's Day
•Memorial Day
•Juneteenth
•Independence Day
•Labor Day
•Thanksgiving Day
•Christmas Day
[Add or remove holidays to fit your business. The average US private employer
observes about 8 paid holidays. Common additions: Martin Luther King Jr. Day,
Presidents' Day, the day after Thanksgiving, Christmas Eve.]
The office will be closed on these days.
3. ELIGIBILITY
[Full-time] employees are eligible for holiday pay. [State how part-time and
temporary employees are treated: not eligible, pro-rated, or paid only for
holidays that fall on a scheduled workday.]
4. HOLIDAY PAY
Eligible employees receive their regular pay for observed holidays that fall on
a scheduled workday, without having to work.
5. WEEKEND OBSERVANCE
When a holiday falls on a Saturday, it is observed on [the preceding Friday].
When it falls on a Sunday, it is observed on [the following Monday].
6. HOLIDAY DURING PTO OR LEAVE
If an observed holiday falls during an employee's approved vacation, the day is
counted as a holiday, not as a vacation day.
7. ACKNOWLEDGMENT
I have read and understood this Holiday Policy.
Employee signature: __ Date: _
DISCLAIMER: This is a sample template for general information only and is not
legal advice. Holiday pay is generally not required by federal law, but state
rules and religious-accommodation duties apply; have a qualified employment
For businesses that stay open. Covers coverage and minimum staffing, pay for working a holiday, and whether shifts are voluntary or required, with the state right-to-decline note.
Open-on-Holidays Policy (Retail / Hospitality)
HOLIDAY POLICY (BUSINESS STAYS OPEN)
[Company Name]
Effective date: _
For businesses that remain open on some or all holidays and need coverage.
1. HOLIDAYS WE STAY OPEN
[Company Name] remains open on [list holidays, or "all holidays except
[Thanksgiving and Christmas]"]. Business hours on those days are [hours].
2. OBSERVED HOLIDAYS FOR PAY
The following are recognized as holidays for pay purposes:
•[New Year's Day, Memorial Day, Juneteenth, Independence Day, Labor Day,
Thanksgiving, Christmas, and any others you choose.]
3. WORKING ON A HOLIDAY
•Coverage: [State how shifts are assigned: volunteers first, then by rotation,
or by seniority. Note any minimum-staffing needs.]
•Pay for hours worked on a holiday: [State your rule. Federal law does not
require premium pay, but many employers offer time-and-a-half or a
compensatory day off. Choose one and apply it consistently.]
•Exempt employees: receive their normal salary and [may receive a compensatory
day, if your policy provides one].
4. VOLUNTARY VS REQUIRED SHIFTS
[State whether holiday shifts are voluntary or required, and how far in advance
the holiday schedule is posted. Note: a few states give employees the right to
decline holiday or Sunday work; confirm the rule for your state.]
5. ELIGIBILITY AND ACKNOWLEDGMENT
[State eligibility for holiday pay.]
I have read and understood this Holiday Policy.
Employee signature: __ Date: _
DISCLAIMER: This is a sample template for general information only and is not
legal advice. Rhode Island requires premium pay for holiday and Sunday work, and
some states protect the right to decline; confirm your state's rules and have a
qualified employment attorney review before adopting.
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A pay-focused version: eligibility, regular versus premium pay for working a holiday, exempt versus non-exempt, and how holiday pay interacts with FLSA overtime.
Holiday Pay / Premium Pay Policy
HOLIDAY PAY POLICY
[Company Name]
Effective date: _
A pay-focused policy covering who is paid, at what rate, and how holiday pay
interacts with overtime.
1. HOLIDAY PAY FOR TIME OFF
Eligible [full-time] employees receive their regular rate of pay for observed
holidays not worked. Eligibility begins [on hire / after [90] days].
2. PREMIUM PAY FOR WORKING A HOLIDAY
Non-exempt employees who work on an observed holiday are paid [time-and-a-half /
double time / their regular rate] for hours worked, in addition to any holiday
pay for the day. [Federal law does not require premium pay; this is your choice.
Rhode Island law requires premium pay for holiday and Sunday work for most
non-exempt retail and general-business employees.]
Exempt employees receive their full salary for any week in which they work and
are not eligible for premium pay.
3. OVERTIME INTERACTION (FLSA)
Under the FLSA, overtime is based on hours actually worked over 40 in a week.
Paid holiday hours not worked do not count toward the 40-hour overtime
threshold. However, if a non-exempt employee actually works on a holiday and
exceeds 40 hours worked that week, normal overtime applies to the hours over 40.
4. HOW PREMIUM AND OVERTIME COMBINE
[State your rule for how holiday premium pay and overtime stack, since this
varies by state. In Rhode Island, retail employers may count Sunday and holiday
hours toward overtime; non-retail may owe both. Confirm your state's rule.]
5. ACKNOWLEDGMENT
I have read and understood this Holiday Pay Policy.
Employee signature: __ Date: _
DISCLAIMER: This is a sample template for general information only and is not
legal advice. Premium-pay and overtime rules vary by state; have a qualified
employment attorney review before adopting.
Template 4: Floating Holiday Policy
Paid days off the employee chooses, for a holiday you do not observe or a personal, cultural, or religious day. Covers grant timing, carryover, and religious use.
Floating Holiday Policy
FLOATING HOLIDAY POLICY
[Company Name]
Effective date: _
Floating holidays are paid days off that employees choose, often used for a
holiday the company does not observe or for a personal, cultural, or religious
day.
1. HOW MANY AND WHO GETS THEM
Eligible [full-time] employees receive [1 to 2] floating holidays per calendar
year. [State whether they are granted at hire, on the anniversary date, or after
a waiting period, and how part-time employees are treated.]
2. HOW TO USE A FLOATING HOLIDAY
•Request a floating holiday from [manager] at least [1 week] in advance.
•Approval is based on coverage and business needs, applied consistently.
•A floating holiday is taken as a full day [or may be taken in half-days, if
you allow it].
3. CARRYOVER AND PAYOUT
[State your rule: whether unused floating holidays carry over, expire at year
end, or are paid out at separation. Note that in some states earned time treated
as wages must be paid out; confirm your state's rule before choosing
use-it-or-lose-it.]
4. RELIGIOUS AND CULTURAL USE
Floating holidays may be used for a religious or cultural observance the company
does not already recognize as a paid holiday. This is one way [Company Name]
supports reasonable religious accommodation.
5. ACKNOWLEDGMENT
I have read and understood this Floating Holiday Policy.
Employee signature: __ Date: _
DISCLAIMER: This is a sample template for general information only and is not
legal advice. Carryover and payout of earned time are governed by state law;
have a qualified employment attorney review before adopting.
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Template 5: Religious and Cultural Accommodation Policy
Written to the current undue-hardship standard. Covers the request process and the range of possible accommodations, from a floating day to a shift swap to unpaid time.
Religious and Cultural Accommodation Policy
RELIGIOUS AND CULTURAL ACCOMMODATION POLICY
[Company Name]
Effective date: _
[Company Name] respects the diverse religious and cultural observances of our
employees and provides reasonable accommodation for sincerely held religious
practices.
1. OUR COMMITMENT
[Company Name] will reasonably accommodate an employee's sincerely held
religious observance or practice, including time off for a religious holiday not
on our observed list, unless doing so would cause an undue hardship, meaning a
substantial increased cost to the operation of our business.
2. HOW TO REQUEST AN ACCOMMODATION
•Submit your request to [manager / Owner] as far in advance as possible.
•Describe the observance and the time or scheduling change you need.
•We will discuss options with you and respond promptly.
3. POSSIBLE ACCOMMODATIONS
Depending on the situation, a reasonable accommodation may include:
•Using a floating holiday or accrued PTO.
•Swapping shifts with a coworker.
•Taking unpaid time off.
•Adjusting the work schedule for that day.
4. HOW WE DECIDE
We consider each request individually and grant it unless it would create a
substantial increased cost or burden given the size and operating cost of our
business. We do not deny requests based on coworker preference or general
inconvenience alone.
5. ACKNOWLEDGMENT
I have read and understood this Religious and Cultural Accommodation Policy.
Employee signature: __ Date: _
DISCLAIMER: This is a sample template for general information only and is not
legal advice. Religious accommodation is governed by Title VII and, after a 2023
Supreme Court decision, a heightened undue-hardship standard; have a qualified
employment attorney review before adopting.
Template 6: Small-Business Holiday Policy
A short, plain-language version for a small team where the owner handles this directly, with minimal bracketed fields and a plain religious-accommodation note.
Small-Business Holiday Policy (5 to 10 Employees)
HOLIDAY POLICY (SMALL BUSINESS)
[Company Name]
Effective date: _
A short, plain-language holiday policy for a small team where the owner or a
manager handles this directly.
DAYS WE ARE CLOSED
[Company Name] is closed, with pay for eligible employees, on:
•New Year's Day
•Memorial Day
•Independence Day
•Labor Day
•Thanksgiving Day
•Christmas Day
[Adjust this list to fit your business. Most small employers offer 6 to 8 paid
holidays.]
WHO GETS PAID
Full-time employees are paid for these holidays. [State how part-time employees
are handled.]
IF YOU WORK A HOLIDAY
If we ask you to work on a holiday, [state what you pay: regular rate,
time-and-a-half, or a day off in exchange]. We will let you know in advance.
TIME OFF FOR A HOLIDAY WE DO NOT OBSERVE
If you observe a religious or cultural holiday that is not on our list, talk to
[Owner / Manager Name]. We will work with you on time off, such as using PTO,
swapping a day, or taking unpaid time.
ACKNOWLEDGMENT
I have read and understood this Holiday Policy.
Employee signature: __ Date: _
DISCLAIMER: This is a sample template for general information only and is not
legal advice. Even a small business must reasonably accommodate religious
observances and follow any state holiday-pay rules; have an employment attorney
review before adopting.
US Federal Holidays
The federal holiday calendar governs federal offices, not private businesses, but it is the reference point most employers build their list from. There are 11 federal holidays. Here are the 2026 dates, including the observed date where a holiday falls on a weekend.
Holiday
2026 date
Observed
New Year's Day
Thursday, Jan 1
Jan 1
Martin Luther King Jr. Day
Monday, Jan 19
Jan 19
Presidents' Day
Monday, Feb 16
Feb 16
Memorial Day
Monday, May 25
May 25
Juneteenth
Friday, Jun 19
Jun 19
Independence Day
Saturday, Jul 4
Fri, Jul 3
Labor Day
Monday, Sep 7
Sep 7
Columbus Day
Monday, Oct 12
Oct 12
Veterans Day
Wednesday, Nov 11
Nov 11
Thanksgiving
Thursday, Nov 26
Nov 26
Christmas
Friday, Dec 25
Dec 25
You Choose Which to Observe
A private business is not required to observe any of these, and most do not observe all 11. The common core is the big six: New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas. Many employers add a few more to reach the roughly 8-holiday average. Pick the set that fits your operating calendar and list them explicitly in your policy. For the full official list, see the Office of Personnel Management. This is general information, not legal advice.
Holiday Pay and the Law
Holiday pay looks simple until religious accommodation, state premium-pay rules, and FLSA overtime enter the picture. Four points define what you actually have to do and where the choices are yours.
Federal law does not require paid holidays or premium pay
This surprises many first-time employers. The Fair Labor Standards Act does not require private employers to give federal holidays off, to pay for holidays not worked, or to pay a premium rate for working on a holiday. The Department of Labor treats holiday benefits as a matter of agreement between an employer and an employee. That is exactly why a written holiday policy matters: since the law sets no default, your policy is what defines which days are paid, who is eligible, and what happens when someone works a holiday. Access is common but not universal. According to the U.S. Bureau of Labor Statistics, about 81 percent of private industry workers had access to paid holidays, with an average of 8 paid holidays. Offering a clear set of paid holidays is a low-cost, competitive benefit. This is general information, not legal advice.
You must reasonably accommodate religious observances
Title VII of the Civil Rights Act, which applies to employers with 15 or more employees, requires reasonable accommodation of an employee's sincerely held religious observance or practice, such as time off for a holiday you do not observe, unless it causes undue hardship. The standard for what counts as undue hardship changed. In a unanimous 2023 decision, Groff v. DeJoy, the Supreme Court held that an employer denying a religious accommodation must show that granting it would result in substantial increased costs in relation to the conduct of its particular business. The older de minimis, or trivial-cost, standard is no longer enough. In practice, this means you should take religious time-off requests seriously, offer options like a floating holiday, a shift swap, or unpaid time, and deny only for a genuine, substantial burden. This is general information, not legal advice.
A few states change the holiday-pay math
While federal law sets no premium-pay rule, a small number of states do, and they can flip your policy. Rhode Island is the notable one: it requires most non-exempt retail and general-business employees to be paid one-and-a-half times their regular rate for work performed on Sundays and certain state holidays, separate from overtime. Massachusetts previously required retail Sunday and holiday premium pay under its Blue Laws, but that premium was fully phased out and eliminated as of January 1, 2023, though the Blue Laws still restrict when some businesses may operate and protect an employee's right to decline holiday work. Because these rules turn on the employee's work state and can change, a multi-state or remote employer should confirm the current rule for each state where people work before finalizing holiday pay. This is general information, not legal advice.
Holiday pay and overtime are separate calculations
A common payroll error is mixing up holiday pay and overtime. Under the FLSA, overtime is triggered by hours actually worked over 40 in a week, not by which day they fall on. Paid holiday hours that are not worked do not count toward the 40-hour overtime threshold, so an employee paid for a holiday they did not work has not automatically earned overtime. But if a non-exempt employee actually works on a holiday and that pushes their worked hours past 40 for the week, normal overtime applies to the hours over 40, on top of any holiday premium your policy provides. Exempt employees must receive their full salary in any week they perform work, regardless of holidays. Keep the two calculations distinct, and state clearly in your policy how any holiday premium and overtime combine. This is general information, not legal advice.
Two States Worth a Closer Look
Rhode Island requires premium pay of one-and-a-half times the regular rate for most non-exempt employees who work Sundays and certain holidays. Massachusetts eliminated its retail Sunday and holiday premium pay as of January 1, 2023, though its Blue Laws still restrict some operations and protect the right to decline holiday work. Because the rule follows the employee's work state and can change, confirm the current rule for each state where you have employees. This is general information, not legal advice.
The through-line is that the federal floor is low, your policy fills the gap, and two things you cannot simply choose away are religious accommodation under Title VII and any state premium-pay rule. For the pay mechanics of who is exempt, the exempt versus non-exempt guide and the FLSA overview give the background.
Holiday Policy for Small Business
A large company runs holidays through an HR team and payroll software that tracks premium pay and multi-state rules. A small business has an owner or a manager doing it directly, often for a team small enough that everyone notices whether the rules are applied fairly. The good news is that the policy itself is the same at any size; a small business just needs it expressed simply and applied consistently, with the same religious-accommodation and state-law awareness a large employer uses.
Keep It Short, but Keep Accommodation and State Rules
A small team does not need a complex policy to handle holidays well. A clear list of paid days, a stated eligibility rule, a plan for working holidays, and a signed acknowledgment cover most of it. The two things you cannot simplify away are religious accommodation, which applies at 15 employees under Title VII, and any state premium-pay rule where your people work. Start simple, but keep those two, and refresh the dates each year. This is general information, not legal advice.
The single most useful habit for a small business is publishing the year's holiday schedule in advance and handling religious or floating-holiday requests the same way every time. That predictability prevents most of the friction holidays can create, and it keeps the accommodation process clean if a request comes in.
E-Sign, Publish, and Update
A holiday policy works when employees have signed it, the schedule is shared ahead of time, and the dates stay current year to year. That means adopting the policy, e-signing it on hire, publishing the schedule, and refreshing the holiday dates and state callouts annually.
Set the holiday list
Pick your observed paid holidays, eligibility, and pay rules, and choose the variation that fits how your business operates on those days.
E-sign on hire
Have each employee read and e-sign the holiday policy during onboarding, so the acknowledgment is on file and expectations are clear.
Publish the schedule
Share the year's holiday schedule in advance, handle any religious-accommodation or floating-holiday requests, and post working-holiday shifts early.
Store and update
Keep the signed policy on file and refresh the holiday dates and any state-law callouts each year so the policy stays current.
The templates above work on their own. To run the policy without paper, FirstHR captures the acknowledgment with e-signature during onboarding, the same flow it uses for the employee handbook, stores the signed policy against the employee profile, and keeps the handbook holiday section in one place so you can update the dates each year and redistribute for re-acknowledgment. FirstHR is an onboarding and HR platform, not a payroll provider or a law firm: it does not calculate holiday or premium pay, run payroll, or decide accommodation questions, so pair it with your payroll provider and a qualified professional for those calls. Applicant tracking is coming soon to FirstHR.
Key Takeaways
A company holiday policy sets which days are paid holidays, who is eligible, how holiday pay works, and how to handle weekend and floating holidays.
In US usage, a holiday policy is about company days off, not annual vacation as in British English; keep holiday, vacation, and PTO in separate policies.
No federal law requires paid holidays or premium pay; about 81 percent of private workers have paid holidays, averaging 8 days.
Title VII requires reasonable religious accommodation at 15 or more employees, under a heightened substantial-cost standard since a 2023 Supreme Court ruling.
A few states change the math; Rhode Island mandates holiday and Sunday premium pay, and holiday pay and overtime are separate FLSA calculations.
Publish the schedule in advance, collect a signed acknowledgment, and refresh the dates each year. This is general information, not legal advice.
Frequently Asked Questions
What is a company holiday policy?
A company holiday policy is a written document that sets out which days a business observes as paid holidays, who is eligible for holiday pay, how pay works for employees who work on a holiday, and how related situations are handled, such as a holiday falling on a weekend or during an employee's vacation. It often also covers floating holidays and religious accommodation. It is an employer-side document, usually a section of the employee handbook, created by HR or, in a small business, the owner or a manager. Its value is clarity and consistency: since federal law sets no default for holidays, the policy is what defines the benefit and applies it the same way to everyone. Note that in US usage a holiday policy is about company days off, not, as in British usage, about annual vacation leave. This is general information, not legal advice.
What is the difference between a holiday, vacation, and PTO?
They are three different things. A holiday is a fixed, company-wide day off tied to the calendar, such as Independence Day or Christmas, that applies to everyone on the observed date. Vacation is individually scheduled time off that an employee requests and takes when they choose. PTO, or paid time off, is often a single combined bank an employee draws from for vacation, sick, or personal reasons. A holiday policy governs the calendar-based company days; a vacation or PTO policy governs the individually scheduled time. Many small businesses have all three, and it helps to keep them in separate policies so eligibility and pay rules stay clear. If you run a combined time-off bank, pair this holiday policy with a dedicated vacation or PTO policy. This is general information, not legal advice.
Are private employers required to give paid holidays?
No. Under the federal Fair Labor Standards Act, private employers are not required to give federal holidays off, to pay for holidays employees do not work, or to pay a premium rate for working on a holiday. The Department of Labor treats holiday benefits as a matter of agreement between an employer and an employee. The federal holiday calendar governs federal offices and pay, not private businesses. That said, paid holidays are a common and expected benefit: roughly 81 percent of private industry workers have access to paid holidays, averaging about 8 days. A few states add requirements on top of the federal floor, most notably Rhode Island, which mandates premium pay for holiday and Sunday work for many non-exempt employees. Outside those states, the number and pay of holidays is your business decision, which is exactly why a written policy matters. This is general information, not legal advice.
How many paid holidays should a small business offer?
There is no legal minimum, so the answer is a competitive decision, and the market gives a clear anchor. The average US private employer offers about 8 paid holidays, and most small businesses land in the 6 to 8 range. A common starting set is the big six that nearly everyone observes: New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas. From there, businesses often add Martin Luther King Jr. Day, Juneteenth, Presidents' Day, or the day after Thanksgiving to reach eight. Offering paid holidays is one of the lower-cost ways to compete for hourly talent, since the cost is roughly the number of employees times their hourly rate times the hours in each holiday. Pick a set that fits your operating calendar, put it in writing, and apply it consistently. This is general information, not legal advice.
Do you have to pay time and a half for working on a holiday?
Not under federal law. The FLSA does not require premium pay for working on a holiday; overtime is based on hours worked over 40 in a week, not on which day they fall. So an employee who works on a holiday but stays under 40 hours for the week is owed only their regular rate unless your policy provides more. Many employers choose to offer time-and-a-half or a compensatory day for holiday work to stay competitive, but that is a policy choice, not a federal requirement. The main exception is Rhode Island, which requires premium pay of one-and-a-half times the regular rate for most non-exempt employees who work on Sundays and certain state holidays. If you have employees in Rhode Island, or in any state, confirm the state rule and state your premium-pay choice clearly in your policy. This is general information, not legal advice.
What is a floating holiday?
A floating holiday is a paid day off that the employee chooses, rather than a fixed calendar date the whole company observes. Employees typically use floating holidays for a holiday the company does not observe on its standard list, or for a personal, cultural, or religious day that matters to them. A floating holiday policy sets how many days employees get, usually one or two per year, when they are granted, how to request one, and what happens to unused days at year end. Floating holidays are a practical tool for religious accommodation, because they let an employee take a day for an observance the company does not recognize without needing a separate exception each time. Because a floating holiday can be treated as earned time, check whether your state requires payout of unused days before you adopt a use-it-or-lose-it rule. This is general information, not legal advice.
Do employers have to accommodate religious holidays?
Often, yes. Title VII of the Civil Rights Act, which applies to employers with 15 or more employees, requires reasonable accommodation of an employee's sincerely held religious observance or practice, including time off for a religious holiday the company does not observe, unless the accommodation would cause undue hardship. A 2023 Supreme Court decision, Groff v. DeJoy, raised that bar: an employer must now show that granting the accommodation would result in a substantial increased cost to its business, not merely a trivial one. Practically, this means you should take religious time-off requests seriously and offer options such as a floating holiday, a shift swap, using PTO, or unpaid time, and deny only when there is a genuine, substantial burden. Even employers under 15 employees benefit from a clear accommodation approach. This is general information, not legal advice.
What happens when a holiday falls on a weekend?
That is a choice your policy should state clearly, because there is no federal rule binding private employers. The common convention, which the federal government follows for its own employees, is to observe a Saturday holiday on the preceding Friday and a Sunday holiday on the following Monday, so employees still get a day off. Some businesses instead only give the day if it falls on a scheduled workday, and do not shift it. Either approach is acceptable for a private employer; what matters is that your policy says which one you use, so employees know in advance and the rule is applied the same way every year. Spell out the weekend-observance rule in the policy rather than deciding case by case. This is general information, not legal advice.
