What Are Paid Holidays?

Paid holidays refer to national, state, or religious holidays wherein employers may decide to give their employees a paid day off. The Fair Labor Standards Act (FLSA) does not have any regulation requiring employers to offer this benefit. Hourly and salaried employees have no legal difference in the determination of their paid holidays. Employers decide whether to give their employees a day off on a holiday and if that day would be a paid day off.

How do paid holidays vary between hourly and salaried employees?

Holidays do not automatically qualify hourly employees for overtime pay unless employers decide to offer additional compensation. Salaried employees, on the other hand, may not necessarily have paid holidays because they are paid annually and are not entitled to overtime pay. Paid holidays are imperative to employees and are usually among the most desirable benefits provided by employers. In fact, research suggests that employees value paid time off and vacation time more than better pay. Offering paid holidays boosts employee satisfaction, loyalty, and overall well-being.

Benefits of Offering Paid Holidays

Paid holidays often result in employee satisfaction, providing numerous benefits to the organization, depending on its industry and culture. Studies confirm that paid time off correlates with increased engagement, better job performance, and decreased turnover rates. Additionally, paid holidays enable employees to spend time with their family and friends, instilling a sense of work-life balance and showing employees that their employer cares about their holistic development.

Most Common Paid Holidays

Employers typically provide their employees with an average of eight paid holidays annually. The most common paid holidays are New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day, among others. Employers may also choose to provide other federal holidays as paid holidays.

Read more about how federal holidays affect payroll.