Q&A with The Workplace Advisors – June 2026

Holiday pay can create confusion for employers calculating overtime for non-exempt employees, especially when paid holidays push total paid hours above 40 in a workweek. In this month’s Q&A, The Workplace Advisors explain the difference between paid time and hours worked, and why holiday pay generally does not need to be included when determining overtime obligations.

Question: We pay our employees for the major holidays when we are closed. Does holiday pay need to be counted toward overtime for non-exempt employees?

Answer: No, holiday pay does not need to be counted toward hours worked when determining if a non-exempt employee is owed overtime. Overtime is for time the employee works or other compensable time (such as certain travel time) within the established seven-day workweek. Non-compensable time, such as vacation, sick leave, holiday pay, and bereavement time, does not need to be included in that calculation unless your company voluntarily chooses to count it.

For example, if an employee works 33 hours and receives 8 hours of holiday pay, they would be paid for 41 hours at their regular hourly rate. However, if they work 42 hours and receive 8 hours of holiday pay, they would be paid 48 hours at the regular rate and 2 hours at time-and-a-half (assuming state overtime laws follow FLSA).