How to Calculate Holiday Pay (With Examples)

Holiday pay covers two different things: paying employees for a holiday they take off, and paying a premium rate to those who work on a holiday. In the US, neither is required by federal law for private employers — holiday pay is a policy or contract benefit — but if you offer it, you need to calculate it correctly. This guide covers both, with examples. It's general information, not legal advice.

The two kinds of holiday pay

• Paid day off: the employee doesn't work but is paid their normal wages for the holiday.
• Holiday premium: the employee works the holiday and earns an extra rate (like 1.5× or 2×) as an incentive.

Which applies depends entirely on your policy or agreement.

Paid holiday (not worked)

For a paid day off, the employee simply receives their normal pay. For an hourly worker, that's typically their standard daily hours × rate:

8 hours × $20 = $160 holiday pay for the day, even though no work happened.

Salaried employees usually see no change — their salary already covers the day.

Holiday premium (worked)

If someone works the holiday and your policy pays a premium, multiply their hours by the premium rate. At time-and-a-half for a worker at $20/hour:

• Premium rate: $20 × 1.5 = $30
• 8 hours × $30 = $240

Some policies pay double time (2×) for holidays, which at $20/hour would be $40 × 8 = $320.

The stacked case: paid holiday plus worked

Some generous policies give both — normal holiday pay and premium pay for working it. Under such a policy, the $20/hour worker above might get $160 (the paid holiday) plus $240 (time-and-a-half for working) = $400. This is a policy choice, not a requirement, so check what yours specifies.

Holidays and overtime

Watch how holiday hours interact with overtime. Whether paid holiday hours (not worked) count toward the 40-hour overtime threshold depends on your policy and local rules — federally, hours not worked generally don't count toward overtime. Track holiday hours separately so the overtime math stays correct.

Track holidays and premiums cleanly

Applying the right rate to holiday hours, and keeping them separate from overtime, is fiddly by hand. Timesheet Maker lets you flag holiday hours, apply your holiday premium rule, and keep them distinct from regular and overtime totals — so holiday pay is correct and your overtime calculation isn't thrown off.

Frequently asked questions

Is holiday pay required by law? Not under US federal law for private employers. Holiday pay — whether a paid day off or a premium for working — is a policy or contract benefit. Some jurisdictions differ, so check your local rules.

How do I calculate holiday premium pay? Multiply the hours worked on the holiday by the premium rate in your policy — commonly 1.5× (time and a half) or 2× (double time) the regular rate.

Does holiday pay count toward overtime? Generally, hours not worked (like a paid day off) don't count toward the 40-hour overtime threshold under federal rules, but policies vary. Track holiday hours separately.

What is a typical holiday pay rate? Common premiums are time and a half (1.5×) or double time (2×) for working a holiday, but the exact rate depends on your policy or contract.

Get holiday pay right

Decide paid-off vs. premium, apply the correct rate, and keep holiday hours separate from overtime. To automate it, try Timesheet Maker free.