Paying for the Labor Day Holiday

How to compensate an employer for overtime

With Labor Day rapidly approaching there are always a lot of questions that arise around holidays about how you are supposed to handle holiday pay. So I thought I would answer this question as I often get asked regarding if employees have to be paid for a holiday. The answer is, as often occurs in HR, “it depends.” Here is what it depends on:

  • In the private sector under the Fair Labor Standards Act if the employee is classified as non-exempt there is no requirement to pay them for holiday hours that are spent not working. If you do pay them for the holiday it is at the company’s discretion and a matter of company policy and past practice.
  • If the holiday is paid by the company it DOES NOT have to be counted as time worked in the calculation of overtime.
  • It does have to be considered in the calculation of the regular rate of pay in the event overtime is worked in that pay period.
  • In the private sector if the employee is an exempt employee the employee must be paid their entire salary for the week regardless if they work the holiday or not. If they do not work the holiday they cannot have their pay docked.
  • Many people think that because they are working on a holiday that they are due “double time” since they are working on a holiday. Under the FLSA that is not trueThis can be done by company policy or by union contract but it is not required by the Fair Labor Standards Act.
  • Union contracts or status as a state employee will alter these requirements.
  • State employment laws, or even local labor laws, may require additional pay, so make sure you are aware of these alterations from federal requirements.

Many of the “rules and regulations” people think they are aware of are actually things they have experienced in other companies or existed because they were in a position that was included in a union contract. Companies indeed can be more generous than the law allows. If a company wants to pay double time for working on a Monday that is a federal holiday they can. If they want to include that holiday in the calculation of overtime pay they are more than free to do so. But all of this is driven by company policy and their desire to attract and retain employees.

Paying for the Labor Day Holiday

Smaller companies, particularly those with lean margins, most likely will abide by the minimum standards set by the Fair Labor Standards Act and will not pay extra dollars beyond the requirements. If you work the holiday, then thank you. You deserve to be paid for the work, but it was your option to work for the company and you should not necessarily expect more than you accepted.


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Mike Haberman

Michael (Mike) D. Haberman, SPHR is a consultant, speaker, writer of HR Observations, and co-founder of Omega HR Solutions, Inc. After over 30 years in HR he got tired of the past and focuses here on the Future of HR. Connect with Mike.


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