Guide · October 13, 2026 · 6 min read

Holiday Pay vs Holiday Differential Pay

Paid holiday, holiday premium, double time: employers use these words loosely. Here is what each one means, what the law requires, and how they affect overtime.

Four Things People Call “Holiday Pay”

Ask three coworkers what “holiday pay” means and you may get three different answers. Employers use the phrase for at least four different things, and only one of them is a federal requirement for non-exempt employees.

TermWhat it isRequired by federal law?
Paid holidayPay for a holiday you did not work (for example 8 hours at your base rate)No
Holiday premium / differentialExtra pay on top of base for hours you do work on the holiday, as a percentage or flat amountNo
Double timePaying 2× the regular rate, often as the holiday premiumNo (policy or contract)
Overtime1.5× the regular rate after 40 hours in a workweekYes, for non-exempt employees

The Fair Labor Standards Act does not require employers to give paid holidays or to pay extra for working one. Those benefits come from company policy, a union agreement, or in a few cases state or local rules. What the federal law does regulate is how overtime is calculated once you have worked more than 40 hours.

Example: Working Christmas Day

Sam earns $18/hr. His employer pays a 100% holiday premium for hours worked on Christmas Day, and he worked an 8-hour shift. His holiday rate is $18 + $18 = $36/hr, so the shift pays $288. A normal day would have paid $144, so the premium is $144. A coworker who took the day off and gets a paid holiday receives $144 for not working. In both cases the pay comes from policy, not from federal law.

Does Holiday Premium Count Toward Overtime?

It depends on how large the premium is. Under the FLSA, premium pay for work on a holiday, Saturday, Sunday or regular day of rest can be left out of the regular rate only if it is paid at a rate of at least 1.5 times the regular rate (29 CFR § 778.203). A smaller premium is treated like any other differential and goes into the regular rate.

Here is what that looks like for a smaller premium. Dana earns $20/hr and worked 48 hours in a week, including 8 holiday hours that carry a 25% premium ($5/hr, or $40 in total). Her regular rate is ($20 × 48 + $40) ÷ 48 = $20.83, so overtime premium is 0.5 × $20.83 × 8 = $83.33 instead of the $80.00 she would get on the base rate alone. Her total for the week is $960.00 + $40.00 + $83.33 = $1,083.33.

Paid holidays that you did not work are handled differently again: pay for time not worked is generally not counted in the regular rate, and those hours do not count toward the 40-hour overtime threshold either.

How to Check Your Own Paycheck

Try It
Calculate your holiday pay

Enter your base rate, total hours, and the holiday hours with your premium to see the full breakdown.

Open the Holiday Pay Calculator

Where Rules Differ

A handful of states and cities regulate work on specific holidays or Sundays in narrow circumstances, and public-sector and union jobs often have their own schedules. Check your state labor department, and see the U.S. Department of Labor FLSA overview for the federal baseline.

Frequently Asked Questions

No. The FLSA does not require paid holidays or extra pay for working a holiday. These are set by employer policy, union contracts or, in limited cases, state or local rules.
Only if your employer or union contract provides it. Double time on holidays is a common policy, but it is not required by federal law.
If the premium is less than 1.5 times your regular rate, it generally has to be included in the regular rate used for overtime. Premiums of 1.5 times or more for holiday work can be excluded under federal rules.

This article is for informational purposes only and isn’t legal advice. Confirm your specific pay policy with your employer, HR department or the U.S. Department of Labor.

Written by the ShiftDifferentialCalculator.com Editorial Team
Reviewed for accuracy against current U.S. Department of Labor FLSA guidance. Learn more about us →
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