Holiday Pay Laws by State: What Employers Actually Owe

State holiday-pay rules. Hover any state for the operative authority.

Federal law does not require holiday pay, and Rhode Island is the only state with a broad Sunday-and-holiday premium rule.

For most employers, the holiday-pay question starts with your own policy: what you promised in the handbook, offer letter, union agreement, or past practice. The Fair Labor Standards Act does not require paid holidays, and it does not require extra pay just because someone worked on a holiday. The Department of Labor says the same thing directly: holiday pay is a matter of agreement between the employer and the employee.

The harder issue is what happens after you decide to pay something. If you announce a holiday bonus and an hourly employee works overtime in that same workweek, the bonus usually has to be included in the overtime rate. That is the mistake that creates back pay: the employer pays the bonus and the usual overtime premium, but forgets that the bonus raised the regular rate for that week.

Try the holiday pay calculator with the §778.211 bonus-trap mode →

Quick reference

• Federal rule: No required holiday pay. Paid holidays and holiday premiums are usually employer-policy choices.
• Rhode Island: R.I. Gen. Laws §25-3-3 requires at least 1.5× for Sunday and holiday work, with important statutory exemptions.
• Massachusetts: The old retail Sunday/holiday premium was phased out under Chapter 121 of the Acts of 2018 and is no longer required.
• Big payroll trap: Announced, promised, or expected holiday bonuses can raise the overtime rate for any week where the employee worked over 40 hours.
• True discretionary bonuses: A bonus is discretionary only if the employer keeps control over both whether to pay it and how much to pay until near the end of the period.
• Federal contractors: Davis-Bacon and Service Contract Act wage determinations can create separate holiday-pay obligations.
• Religious holidays: After Groff v. DeJoy, denying a religious-holiday accommodation requires more than minor inconvenience.
• Multi-state employers: The employee's work location matters for Rhode Island. Everywhere else, the bigger issue is usually your policy and the federal overtime math.

The 5 Most Expensive Holiday-Pay Mistakes

These are the mistakes that turn a simple holiday policy into a payroll correction, wage claim, contractor audit, or religious-accommodation dispute. Each one has a specific fix.

1. Paying an announced holiday bonus without recomputing overtime. A $500 holiday bonus for an employee who worked 50 hours at $20/hour raises the regular rate from $20 to $30 for that week. The overtime premium should be $150, not $100. That $50 gap looks small until it applies to every hourly employee who received the bonus and worked overtime. If the bonus covers more than one workweek, 29 CFR §778.209 requires the employer to allocate it back across the covered weeks and pay the extra overtime for each affected week. See how to calculate retro pay for the correction math and overtime regular rate for the broader regular-rate framework.

2. Labeling a bonus "discretionary" after employees have reason to expect it. Most holiday bonuses are not discretionary in the FLSA sense. The employer has to keep control over both whether to pay the bonus and how much to pay until near the end of the period. If the bonus was promised in a handbook, offer letter, contract, union agreement, or repeated every year as a pattern, payroll should treat it as non-discretionary and include it in the regular rate. A handbook line that says "the Company may, in its sole discretion, pay an annual holiday bonus" does not help if the company has paid one every December for five years.

3. Treating Service Contract Act holiday pay as a substitute for work pay. Federal service contractors have separate rules when a wage determination includes a holiday benefit. If a full-time SCA employee works on a designated holiday, the worker may be owed pay for the workday plus the holiday benefit, or another paid day off. Many contractors treat it as one or the other. The regulation requires both pieces, and mistakes can lead to back-wage recovery and federal contracting consequences.

4. Denying a religious-holiday accommodation under the old standard. Before Groff v. DeJoy, 600 U.S. 447 (June 29, 2023), employers often relied on small costs or scheduling inconvenience to deny religious-holiday accommodations. Groff raised the bar. An employer now has to show a substantial increased cost in relation to its business, not just a minor burden. Voluntary shift swaps, floating-holiday substitution, and flexible scheduling deserve real review before the company says no.

5. Double-counting or miscounting holiday premiums in weekly overtime. If a holiday premium is at least 1.5× the regular rate, the premium portion can usually be excluded from the regular rate and credited toward weekly overtime. The practical mistake is paying the same overtime premium twice, or putting the holiday premium into the regular rate when it should be excluded. Hours that are both over 40 and worked on a holiday need one careful calculation, not two separate guesses.

Federal Baseline: No FLSA Holiday-Pay Requirement

The Fair Labor Standards Act doesn't require paid holidays. It doesn't require a premium for working on a holiday. The DOL Wage and Hour Division's public FAQ is explicit on both points:

"Extra pay for working weekends or nights is a matter of agreement between the employer and the employee (or the employee's representative). The Fair Labor Standards Act (FLSA) does not require extra pay for weekend or night work. However, the FLSA does require that covered, nonexempt workers be paid not less than time and one-half the employee's regular rate for time worked over 40 hours in a workweek."

"The FLSA does not require payment for time not worked, such as vacations, sick leave or federal or other holidays. These benefits are matters of agreement between an employer and an employee (or the employee's representative)."

What FLSA does regulate is how holiday-related payments interact with the regular rate used to compute overtime. That interaction — buried in 29 CFR Part 778 — is where the binding holiday-pay rules actually live.

The three distinct holiday-payment types

"Holiday pay" can mean three different things in payroll practice, and each gets a different FLSA regular-rate treatment:

Situation	Common multiplier	Regular-rate treatment	Source
Holiday off, paid (paid time off)	1× (full day)	Excluded from regular rate	§207(e)(2)
Premium pay for working on a holiday	1.5× or 2×	Excluded if premium ≥ 1.5×	§207(e)(6)
Non-discretionary holiday bonus	Lump sum	Included in regular rate	§778.211
Discretionary holiday bonus (true gift)	Lump sum	Excluded if §211(b) test met	§207(e)(1), (3)

Paid time off for a holiday not worked (§207(e)(2)). Pay for "occasional periods when no work is performed due to vacation, holiday, illness, failure of the employer to provide sufficient work, or other similar cause" is excluded from the regular rate. The same payment also CANNOT be credited toward overtime owed under 29 CFR §778.216 — verbatim, "no part of such payments can be credited toward overtime compensation due under the Act." Paying an employee 8 hours of holiday pay for Thanksgiving doesn't affect OT calculations for the surrounding workweek, and doesn't offset OT premium owed for hours actually worked.

Premium pay for working on a holiday (§207(e)(6)). The premium PORTION of holiday/weekend premium pay (the part over the regular rate) is excluded from the regular rate IF the premium rate is at least 1.5× the regular rate AND is paid because the work is on a designated holiday or weekend. Statutory text: "extra compensation provided by a premium rate paid for work by the employee on Saturdays, Sundays, holidays, or regular days of rest...where such premium rate is not less than one and one-half times the rate established in good faith for like work performed in nonovertime hours on other days." The §207(h)(2) corollary: the same §207(e)(6) premium CAN be credited toward overtime premium otherwise owed for that workweek. A single 1.5× rate for hours worked on a holiday often satisfies BOTH the holiday-policy obligation AND the FLSA OT requirement for those hours.

Non-discretionary holiday bonus (§778.211). This is where most holiday-pay litigation lives. Verbatim from 29 CFR §778.211(c): "Any bonus which is promised to employees upon hiring or which is the result of collective bargaining would not be excluded from the regular rate...Most attendance bonuses, individual or group production bonuses, bonuses for quality and accuracy of work, bonuses contingent upon the employee's continuing in employment until the time the payment is to be made and the like are in this category; in such circumstances they must be included in the regular rate of pay." The inclusion mechanic is at §778.209: "The amount of the bonus is merely added to the other earnings of the employee (except statutory exclusions) and the total divided by total hours worked."

The §778.211 trap, worked

The pattern that catches payroll teams every November and December. Inputs: an employee at $20/hr who works 50 hours in the bonus week, and a $500 holiday bonus announced in October (non-discretionary because announcement abandoned discretion).

Step	Math	Result
Straight-time pay	50h × $20	$1,000
Non-discretionary bonus	(announced in October)	$500
OT hours	max(0, 50 − 40)	10h
OT premium without recompute	$20 × 0.5 × 10	$100
Naive total (the wrong number)	$1,000 + $500 + $100	$1,600
New regular rate	($1,000 + $500) ÷ 50	$30/hr
OT premium at new rate	$30 × 0.5 × 10	$150
Correct total	$1,000 + $500 + $150	$1,650
Additional OT owed	$150 − $100	$50

$50 per employee per bonus week. Multiplied across a 200-person hourly workforce that received a $500 holiday bonus, $10,000 of unpaid OT in a single workweek. Multiplied across multiple bonus cycles, multiple years, with FLSA's two- or three-year statute of limitations + liquidated damages, that's the back-wage settlement pattern. Every modern payroll system can run the §778.211 recomputation; many configurations don't, by default.

Try the §778.211 bonus-trap mode on your own numbers. The default loads the canonical case: 50 hours at $20 base + a $500 announced holiday bonus. The corrected total is $1,650; the additional OT owed because of the bonus is $50.

Pick the calculation you need

Simple holiday payCompute the dollar amount for hours worked on a holiday at 1×, 1.5×, 2×, or a custom multiplier.Regular-rate impact of a bonusDid a non-discretionary holiday bonus change the overtime owed for that workweek? The FLSA §778.211 case most calculators miss.

Your inputs

Base hourly rate ($)Total workweek hoursNon-discretionary bonus ($)

A bonus is non-discretionarywhen announced in advance, promised on hire, set by collective bargaining, or based on past practice (production / attendance / quality / continued-employment bonuses all qualify). A true gift — decided ad-hoc by the employer near period end, both fact and amount — is discretionary and excluded from the regular rate (and this calculation).

Correct weekly total

$1650.00

50.0h at $20.00 + $500.00 bonus + corrected OT premium

---

Math

Straight-time pay (50.0h × $20.00)

$1000.00

Non-discretionary bonus

$500.00

OT hours (over 40h: 10.0h)

10.0h

New regular rate ((straight-time + bonus) ÷ hours)

$30.00/h

OT premium owed (0.5× × 10.0h × new regular rate)

$150.00

Corrected total

$1650.00

---

FLSA §778.211 trap

Without the regular-rate recomputation, you'd pay $1600.00 (straight-time + bonus + base-rate OT premium). The correct total is $1650.00 — an additional $50.00 of OT premium owed because the bonus is included in the regular rate for this workweek. The shortfall multiplied across all eligible employees and workweeks where bonuses landed is what FLSA wage-and-hour audits surface.

Nothing typed here is sent or saved — close the tab and your inputs are gone. The regular-rate-impact mode follows 29 CFR §778.211: a non-discretionary bonus is included in the regular rate for that workweek, recomputing overtime premium owed for any hours over 40. For state-stacked overtime rules (California daily + weekly + double-time + 7th-day; Kentucky 7th-day), use the state overtime calculator; for weekly hours math from clock-in / clock-out, use the time card calculator; for multi-rate workweeks (two posted rates, shift differentials, job changes mid-week) the §778.115 weighted-average rule applies — use the blended overtime calculator. Read the full methodology →

Discretionary vs non-discretionary — the §211(b) test

29 CFR §778.211(b) is the gating test: a bonus is "discretionary" (and therefore excludable under §207(e)(3)) only when, verbatim, "The employer must retain discretion both as to the fact of payment and as to the amount until a time quite close to the end of the period for which the bonus is paid." Three requirements, all required:

1. The fact of payment determined at employer's sole discretion;
2. AND the amount determined at employer's sole discretion;
3. AND the decision made "quite close to the end of the period."

Once any one of those three fails, the bonus is non-discretionary and must be included in the regular rate. The DOL's §211(c) examples of NON-discretionary bonuses include:

• Bonuses promised on hiring
• Bonuses from collective bargaining agreements
• Bonuses announced in advance to encourage steady work
• Attendance bonuses
• Production bonuses (individual or group)
• Quality and accuracy-of-work bonuses
• Continued-employment bonuses

A handbook line that says "the Company may, in its sole discretion, pay an annual holiday bonus" doesn't make the actual bonus discretionary if the company has paid one every December for five years. Past practice itself communicates expectation, and the §778.211(b) test fails on the "fact of payment" prong.

State Law: The Near-Empty Map

49 states and DC have no general statutory holiday-pay requirement. Rhode Island is the one outlier. Massachusetts had a similar retail Sunday/holiday rule that was phased out entirely by 2024. No other state has a general statute. State law that affects holiday-pay PRACTICE — wage-statement details, final-paycheck timing for accrued-but-unpaid holiday pay (analogous to the vacation payout framework) — exists, but it isn't a holiday-pay requirement.

Rhode Island — R.I. Gen. Laws §25-3-3

The only state with a general statutory requirement. Verbatim operative text: "Work performed by employees on Sundays and holidays must be paid for at least one and one-half (1½) times the normal rate of pay." The statute's plain text applies broadly to employees on Sundays and designated holidays; the practical scope skews retail because most non-retail businesses fall within the statute's enumerated exemptions:

• Manufacturers operating seven days per week
• Wall-covering manufacturers
• Certain taxi/limousine companies
• Airport car rental agencies
• Additional categories listed in the operative text

The Rhode Island Department of Labor and Training enforces the statute. The practical point for employers is not to guess from industry labels. Check the statutory exemptions, then treat covered Sunday and holiday hours as 1.5× hours.

Massachusetts — Chapter 121 of the Acts of 2018 (phased out)

Massachusetts historically required 1.5× the regular rate for hours worked on Sundays and certain holidays in retail establishments — blue-laws-era legislation predating the FLSA. Chapter 121 of the Acts of 2018 (the "Grand Bargain": "An Act Relative to Minimum Wage, Paid Family Medical Leave and the Sales Tax Holiday") phased the premium out incrementally:

Year	Required premium
2018 (baseline)	1.5×
2019	1.4×
2020	1.3×
2021	1.2×
2022	1.1×
2023+	Eliminated

As of 2024, Massachusetts has no retail Sunday/holiday premium-pay requirement. The trajectory matters for the article's central claim: state holiday-pay laws are mostly being repealed, not added. The political economy of the era (rising minimum wages, expanded paid family leave) absorbed the bargaining chip.

Every other state

Despite the persistent November/December search volume for "holiday pay by state," no other state has a general statutory holiday-pay requirement. California — strictest state on most wage-and-hour issues — has no holiday-pay statute. Labor Code §510 covers daily and weekly overtime but doesn't require paid holidays or holiday premiums. Wage Order §3 (and the other Wage Orders) doesn't either. New York, Texas, Florida, Illinois, Washington, Oregon — same.

State laws that touch holiday pay indirectly:

• Wage statement laws. Several states require pay-stub itemization of hours and rates IF the employer pays a holiday premium (CA Labor Code §226; see pay stub requirements by state for the §226 derivative-claim mechanics). The state isn't requiring the holiday premium; it's requiring transparency about whatever the employer's policy is.
• Final paycheck statutes. State final-paycheck laws (varying from California's same-day requirement to Texas's flexible-by-circumstance approach) apply to accrued-but-unpaid holiday pay if the employer's policy or contract treats holiday pay as accrued. The analogous framework is more developed for vacation; see vacation payout laws by state.
• Hiring notice requirements. New York Labor Law §195 requires written notice at hire of pay rate and pay-day frequency. California Labor Code §2810.5 requires similar disclosure. Changes to an employer's holiday-pay policy generally require notice in these jurisdictions — but the statutes don't require any particular policy.

For most readers, the practical answer is: holiday-pay policy is whatever the employer's handbook says, plus whatever past practice or contract has established, plus the federal regular-rate framework for bonuses and premium pay. State law is mostly off the picture.

Federal Contractors: Davis-Bacon and the Service Contract Act

Federal contractors operate under two statutory regimes that DO require holiday-pay practice — but indirectly, through prevailing-wage determinations rather than through a flat statutory mandate. Most generic holiday-pay articles skip this layer entirely; for federal contractors it's binding.

Davis-Bacon Act (40 U.S.C. §§3141–3148)

Covers construction, alteration, or repair of public buildings or public works funded by federal contracts in excess of $2,000. The 29 CFR §5.5 contract-clauses regulation requires contractors to pay the locality's prevailing wage, including any "bona fide fringe benefits" specified in the wage determination. Verbatim from §5.5: "Contributions made or costs reasonably anticipated for bona fide fringe benefits under the Davis-Bacon Act...on behalf of laborers or mechanics are considered wages paid to such laborers or mechanics." The contractor may "pay the benefit as stated in the wage determination or may pay another bona fide fringe benefit or an hourly cash equivalent thereof."

Holiday pay, when included, appears in the locality- and classification-specific wage determination — not in §5.5 itself. For a contractor on a federal construction project, the steps are: (1) pull the applicable WD; (2) read the fringe-benefit composition for each labor classification; (3) if the fringe includes a holiday-pay component, provide either paid holidays of equivalent value OR cash-equivalent in the hourly rate.

The 2023 Davis-Bacon Final Rule (88 Fed. Reg. 57526, effective October 23, 2023) restored the three-step prevailing-wage methodology, strengthened anti-retaliation provisions, and expanded coverage to some trucking activities. It didn't change the holiday-pay fringe-benefit framework, but it is still the recent federal contractor update employers are most likely to see in this area.

McNamara-O'Hara Service Contract Act (41 U.S.C. §§6701–6707)

Covers federal service contracts over $2,500. Janitorial, food service, security, IT on federal property — broadly, any service work performed under a federal contract. Like Davis-Bacon, the wage determination for the specific locality + occupation typically includes a "vacation and holiday" fringe-benefit specification.

The SCA's holiday-pay framework is more prescriptive than Davis-Bacon's. 29 CFR §4.174 (verbatim):

• Entitlement: "an employee who performs any work during the workweek in which a named holiday occurs is entitled to the holiday benefit."
• Non-workday treatment: holiday benefits apply "regardless of whether the named holiday falls on a Sunday, another day during the workweek on which the employee is not normally scheduled to work, or on the employee's day off."
• Working on holiday: "a full-time employee who works on the day designated as a holiday must be paid, in addition to the amount he ordinarily would be entitled to for that day's work, the cash equivalent of a full-day's pay up to 8 hours or be furnished another day off with pay."

The "in addition to" is the binding language. SCA employees who work on a designated holiday receive BOTH holiday pay AND pay for the hours worked — not one in lieu of the other. The penalty for getting this wrong is back-wage recovery, plus potential debarment from federal contracting under the SCA's enforcement framework.

Federal holiday sets in SCA wage determinations often track the current federal holiday list, but the exact holiday list and benefit value come from the wage determination. Do not assume the company handbook controls the federal-contract obligation.

Title VII Religious Accommodation — Post-Groff

Title VII prohibits religious discrimination and requires reasonable accommodation for an employee's sincerely held religious belief. That can include religious holidays that are not on the company's standard holiday schedule. The governing standard changed in 2023.

The Hardison "de minimis" standard (1977–2023)

Trans World Airlines, Inc. v. Hardison, 432 U.S. 63 (1977), used a "more than de minimis cost" standard. In practice, that let many employers deny religious-holiday accommodations based on small scheduling burdens or coworker inconvenience.

Groff v. DeJoy (June 29, 2023) — the new standard

Groff v. DeJoy, 600 U.S. 447 (June 29, 2023), rejected the old de minimis framing. Now, if an employer denies a religious accommodation, it must show the accommodation would create substantial increased costs in relation to the business. Small inconvenience is not enough.

The practical impact for holiday-pay decisions:

• Voluntary shift swaps need real review. A coworker swap may be the accommodation, not a reason to reject the request.
• Floating-holiday substitution is often practical. Letting an employee use a floating holiday or PTO day for religious observance may solve the scheduling problem without creating a new pay rule.
• Required attendance on a religious-observance day without analysis is high-risk. Post-Groff EEOC enforcement has emphasized that the accommodation analysis must actually happen — undocumented denials are vulnerable.

The Hardison framework persists in old case law and lower-court opinions that haven't been refreshed against Groff. Employer policies drafted before June 2023 likely codify the de minimis standard and need updating.

State-level analogs

Several states have analogous religious-accommodation statutes that apply Groff's standard or stricter:

• California FEHA (Fair Employment and Housing Act): Cal. Gov. Code §12940(l) requires reasonable accommodation absent "significant difficulty or expense" — a standard CA courts have read as stricter than the pre-Groff federal standard.
• New York Human Rights Law: N.Y. Exec. Law §296(10) is structurally similar to Title VII; post-Groff, the standards have effectively converged.
• Illinois Human Rights Act: 775 ILCS 5; applies the substantial-cost framing.

For multi-state employers, the safer posture is to apply Groff company-wide regardless of which state the employee is in — the state-law floors are at least as strict as Groff in jurisdictions that have one.

Multi-State Employers and Remote Workers

Holiday-pay policy is generally an employer-policy question rather than a jurisdiction-of-work question — which simplifies the multi-state and remote-worker analysis compared to overtime, breaks, or wage-statement compliance. Two operational pieces matter:

1. Rhode Island work attaches RI law. An employee physically working in Rhode Island on a designated holiday or Sunday is subject to R.I. Gen. Laws §25-3-3 regardless of where the employer is headquartered, subject to the statute's exemption categories. A California-headquartered company with retail operations in Providence owes the 1.5× premium for Sunday/holiday work performed in Providence.
2. The federal §778.211 trap applies everywhere. The regular-rate recomputation for non-discretionary bonuses is federal — there's no state variation. An employer paying an announced holiday bonus to an employee anywhere in the country who worked overtime that week owes the §211 recomputation.

For practical compliance, the recommended posture for a multi-state employer is:

• One company-wide holiday-pay policy that meets or exceeds the most-generous jurisdiction's requirement (which is functionally Rhode Island's 1.5× for the small subset of employees actually working in RI on relevant days).
• Per-payroll-cycle §778.211 reconciliation when announced bonuses are paid in workweeks that include overtime hours for any employee.
• Documented religious-accommodation analysis for every denial of a religious-holiday accommodation request, applying Groff's substantial-cost standard.

The compliance overhead is small; the documentation discipline is what matters in an audit or a Title VII charge.

Recent Changes (2024–2026)

The materially significant developments in holiday-pay law and adjacent doctrine since 2023.

Groff v. DeJoy (June 29, 2023) — the doctrinal reset

Already covered above. The biggest holiday-pay-adjacent legal development of the decade. Employer policies drafted before June 2023 codified the Hardison "de minimis" standard; those policies need to be reviewed against the new "substantial increased costs in relation to the conduct of its particular business" standard from Groff.

Davis-Bacon Final Rule (88 Fed. Reg. 57526; effective October 23, 2023)

The Biden DOL's overhaul of Davis-Bacon Act regulations — the first material update in 40 years. Restored the three-step prevailing-wage methodology that was the practice before 1983; strengthened anti-retaliation provisions for workers reporting Davis-Bacon violations; expanded prevailing-wage coverage to additional trucking activities. The rule didn't change the holiday-pay fringe-benefit framework but did update the broader Davis-Bacon compliance posture. Federal-construction contractors should review their compliance posture against the post-2023 regulation.

Camp v. Home Depot (pending at California Supreme Court)

Camp v. Home Depot U.S.A., Inc., 84 Cal. App. 5th 638 (2022), is California's leading case on time-clock rounding. Review granted at the California Supreme Court (S277518) in February 2023; as of mid-2026 the case is still pending. The case's holding — that rounding is impermissible when an employer's timekeeping system can capture exact minutes — would, if affirmed, extend to holiday-rate hours just as it would to regular hours. California's "every minute paid" precept doesn't carve out holiday work. Holiday-pay practitioners with California exposure should track the case alongside the broader rounding analysis. See time clock rounding rules for the full doctrinal chain.

Massachusetts repeal complete (2024+)

Chapter 121 of the Acts of 2018 phased out Massachusetts' retail Sunday/holiday premium-pay requirement on the schedule above. As of 2024, no premium is required. The repeal is complete; Massachusetts joins the 47 other states with no holiday-pay statute.

FAQ

If You Discover You've Been Doing This Wrong

Every employer who has paid an announced holiday bonus to employees who worked overtime has at least some §778.211 exposure. The pattern is so common that the DOL Wage and Hour Division's enforcement playbook explicitly looks for it. If a payroll audit surfaces the gap, the remediation playbook is straightforward:

1. Pull bonus records for the past two years (or three with willful-violation exposure). FLSA's statute of limitations is two years for non-willful violations, three years for willful. "Willful" means the employer knew or showed reckless disregard for FLSA's requirements — a standard met by ignoring the §778.211 framework after being notified.

2. For each bonus, identify recipients who worked overtime in the workweek the bonus was paid. This is the §211 calculation universe. Recipients who didn't work overtime in the bonus week aren't owed additional amounts; only those who crossed 40 hours that week.

3. Run the §778.209 recomputation per recipient per bonus. New regular rate = (workweek straight-time pay + bonus) ÷ workweek hours. Additional OT premium = (new regular rate − old regular rate) × 0.5 × OT hours. The arithmetic is mechanical once the data is assembled.

4. Voluntarily pay the back-wage shortfall with a clear written explanation. Self-correction can improve the record and reduce exposure, but it does not automatically waive liquidated damages, attorney's fees, tax issues, or release questions. The explanation should show which bonus was reviewed, which workweek changed, and how the additional overtime was calculated.

5. Fix the payroll-system configuration so the §778.209 recomputation runs by default on every bonus-bearing workweek going forward. Most modern payroll systems can be configured for this. Document the configuration change so a future audit can verify the corrective action.

If the same mistake affected many employees, multiple bonuses, or several pay periods, consult employment counsel before making payments. The structure of the corrective payments, tax treatment, and release language can matter beyond the wage-and-hour calculation.

The Bottom Line

The state-by-state map is mostly empty: Rhode Island has a broad rule, Massachusetts had one that has been phased out, and the other states generally leave holiday pay to employer policy, contract, handbook, or past practice. Federal law does not create a general holiday-pay requirement either. The real holiday-pay work is in three places: 29 CFR §778.211 for announced bonuses and overtime, 29 CFR §4.174 for federal Service Contract Act employees, and Groff v. DeJoy for religious-holiday accommodations. The bonus issue catches the most employers and is the easiest to audit: find bonus weeks with overtime, recompute the regular rate, pay any shortfall, and fix the payroll process going forward.

Sources

Federal statute and regulation

• 29 U.S.C. §207 — FLSA maximum hours, overtime, regular-rate framework (Cornell LII)
• 29 CFR §778.209 — Method of computing regular rate with bonuses (Cornell LII)
• 29 CFR §778.211 — Non-discretionary bonuses (Cornell LII)
• 29 CFR §778.216 — Vacation/holiday/illness pay exclusions (Cornell LII)
• 29 CFR §4.174 — McNamara-O'Hara Service Contract Act holiday pay (Cornell LII)
• 29 CFR §5.5 — Davis-Bacon contract clauses, including fringe-benefit treatment (Cornell LII)
• 85 FR 2014 — Regular Rate Under the Fair Labor Standards Act (2020 Final Rule) (Federal Register)
• 88 Fed. Reg. 57526 — Updating Davis-Bacon and Related Acts Regulations (2023 Final Rule) (Federal Register)
• DOL Wage and Hour Division FAQ — holiday pay treatment under FLSA (DOL WHD)

Supreme Court cases

• Groff v. DeJoy, 600 U.S. 447 (June 29, 2023) — Title VII religious accommodation; "substantial increased costs in relation to the conduct of its particular business" standard
• Trans World Airlines, Inc. v. Hardison, 432 U.S. 63 (1977) — pre-Groff "de minimis cost" standard for religious accommodation (replaced)

State statutes

• Rhode Island General Laws §25-3-3 — Sunday and holiday work premium pay (RI Legislature)
• Massachusetts Acts of 2018, Chapter 121 — phase-out of retail Sunday/holiday premium pay (Mass. Legislature)

Related Clockspot articles

• Overtime Rules by State — the regular-rate framework in detail; state-by-state daily and weekly OT
• Recordkeeping Requirements by State — FLSA §516 + state recordkeeping rules
• Pay Stub Requirements by State — itemization rules for holiday-premium hours
• Vacation Payout Laws by State — analogous "states with laws / states without" framework
• Time Clock Rounding Rules — Camp trajectory in California