What are paid holidays?

Paid holidays are national, religious, or cultural holidays that an employer observes and provides as paid days off for employees. These specific days are designated by employers, and are a work-life balance benefit for employees. 

In the United States, common paid holidays include federal holidays like New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. While federal law does not mandate paid holidays, many companies offer them as a standard employee benefit to attract and retain talent.

The number and types of paid holidays can vary depending on the employer, industry, and location. Some companies may offer additional holidays beyond the standard ones, while others may provide floating holidays, which employees can use at their discretion.

Paid holidays are usually available to full-time employees, but some companies also offer prorated or adjusted holiday benefits to part-time workers. Nevertheless, eligibility requirements and specific holiday policies may differ from one company to another.

Common paid holidays

While the specific paid holidays offered can vary depending on the employer and industry, here are some of the most typical paid holidays observed in the United States:

How do paid holidays work

Paid holidays are generally a benefit offered to full-time employees, although some companies may offer prorated or adjusted benefits to part-time employees. The specifics of how paid holidays work can vary based on company policy, state law, and the employee's employment contract.

Here's a general overview of how paid holidays typically work:

• Eligibility: Most federal employees are eligible for paid holidays. While private companies are not mandated to make all their employees eligible for holiday pay, it is usually offered to full-time employees. Some companies may also have specific eligibility criteria based on hours worked or job position. To be eligible for paid holidays, part-time employees usually need to have worked for the company for a certain period, such as 30, 60, or 90 days to receive compensation on a holiday off. 
• Holiday pay: Employees who are eligible for paid holidays receive their regular pay for the holiday, even though they are not working. This pay is usually calculated based on the employee's normal hourly or salary rate.
• Working on a holiday: If an employee is required to work on a paid holiday, they may be entitled to additional compensation, such as overtime pay or premium pay, depending on company policy and state law.
• Holiday accrual: In some cases, paid holidays may accrue over time, meaning employees earn a certain amount of holiday pay for each hour or day worked. Other companies may simply provide a set number of paid holidays each year.
• Holiday scheduling: Employers typically establish a holiday schedule in advance, outlining which days will be observed as paid holidays for the year in their employee handbook. This allows employees to plan their time off accordingly.
• State laws: Some states have laws that mandate certain paid holidays or regulate how holiday pay is calculated.
• Company policies: Each company may have its own specific policies regarding paid holidays, including eligibility requirements, accrual rates, and compensation for working on holidays.
• Union contracts: If employees are represented by a union, the union contract may contain specific provisions related to paid holidays.

Paid holidays and the law

In the United States, there are no federal laws mandating that private employers provide paid holidays to their employees. However, some states and local jurisdictions may have their own laws requiring specific holidays or regulating holiday pay practices.

For example, Massachusetts and Rhode Island have "blue" laws that require retail establishments to close on certain holidays or pay employees time-and-a-half for working on those days. Other states may have laws related to holiday pay for specific industries, such as construction or healthcare.

While federal law doesn't require paid holidays, many companies offer them as a standard benefit to attract and retain employees. This is especially true in industries where talent competition is high. Even when not legally required, providing paid holidays can be a valuable tool for employers to boost morale, improve employee retention, and promote a positive workplace culture.

Here's a quick legal rundown on paid holidays:

• State laws: Employers must be aware of any state or local laws that may impact their paid holiday policies. Non-compliance with these laws could lead to legal issues and potential penalties.
• Discrimination: Employers must ensure that their paid holiday policies are applied fairly and consistently to all employees, regardless of their race, religion, or other protected characteristics. Also, employers must make reasonable accommodations to observe religious holidays under the Civil Rights Act.
• Exempt vs. non-exempt employees: The Fair Labor Standards Act (FLSA) distinguishes between exempt and non-exempt employees. Exempt employees receive a fixed salary regardless of hours worked and are not eligible for overtime pay. Non-exempt employees are typically hourly workers who may qualify for overtime compensation for hours exceeding their standard workweek. Paid holiday policies may differ for these two categories of employees.

Paid holidays as an employee benefit

Paid holidays are a valuable employee benefit that contributes significantly to a positive work environment and overall employee well-being. While not legally mandated in the United States at the federal level, many employers offer paid holidays as a way to attract and retain top talent, improve employee morale, and foster a positive company culture.

Here's why paid holidays are a crucial employee benefit:

• Work-life balance: Paid holidays allow employees to disconnect from work and recharge, promoting a healthy work-life balance. This leads to reduced stress, increased productivity, and improved job satisfaction.
• Attracting & retaining talent: Competitive compensation packages that include paid holidays are more attractive to prospective employees. This helps companies attract top talent and retain their current workforce.
• Boosting morale: Recognizing and celebrating holidays through paid time off demonstrates that a company values its employees and their well-being. This can significantly boost employee morale and create a more positive workplace atmosphere.
• Increased productivity: When employees return from a paid holiday, they are often refreshed and re-energized, leading to increased focus and productivity upon their return to work.
• Reduced absenteeism: By providing paid holidays, companies can reduce unplanned absences due to employee burnout or the need to take care of personal matters.
• Positive company culture: Offering generous paid holiday benefits demonstrates that a company cares about its employees and promotes a positive company culture that values work-life balance and employee well-being.

Beyond the tangible benefits, paid holidays contribute to a more positive and supportive workplace environment, where employees feel valued and appreciated. This, in turn, can lead to increased loyalty, engagement, and overall success for the company.