To calculate holiday pay for a part-time employee, work out how many hours that employee would have worked on the holiday and multiply by their regular hourly rate. The two standard ways to reach the hours figure are averaging actual hours over a recent look-back period, usually four weeks, or prorating the full-time holiday benefit against the part-timer’s schedule. Federal law does not require holiday pay in the private sector, so the exact method comes from your handbook, offer letter, or collective bargaining agreement.1U.S. Department of Labor. Holiday Pay Once a policy promises the benefit, state wage payment laws generally make it enforceable, so the calculation needs to be right and applied the same way every time.2U.S. Department of Labor. Handy Reference Guide to the Fair Labor Standards Act
Before running any numbers, pull two things: the employee’s regular hourly rate, stripped of temporary shift differentials or one-time bonuses, and their actual hours worked during the look-back window. Use timekeeping records rather than the posted schedule, because part-time hours tend to move week to week.
Average Daily Hours Method
This method suits employees whose weekly hours swing. Add total hours worked during the look-back period, then divide by the number of workdays in that period. A four-week window at five workdays per week gives a divisor of 20.
Say a part-timer worked 80 hours over the last four weeks. Eighty divided by 20 workdays is an average of 4 hours per day. At $15 an hour, the holiday pay is 4 × $15, or $60 gross.
Run the same employee at 60 hours over the four weeks and the average falls to 3 hours per day, producing $45. The formula self-adjusts for light and heavy weeks, which is why it tends to feel fair to workers with unpredictable schedules.
Prorated Percentage Method
This approach ties the part-time benefit to whatever full-time employees receive. Divide the part-timer’s average weekly hours by the company’s standard full-time week, typically 40, to get a percentage. Apply that percentage to the full-time holiday allotment.
An employee averaging 30 hours per week is at 75 percent of full time (30 ÷ 40 = 0.75). If full-time staff get 8 hours of holiday pay, the part-timer gets 6 hours (8 × 0.75). At $20 an hour, that is $120 gross.
The prorated method is easier to run when part-time schedules stay roughly consistent, and it produces a clean line from schedule to benefit that is straightforward to explain on a pay stub.
Employees With More Than One Pay Rate
Some part-timers work two roles at the same employer at different rates. The usual fix is a weighted average. Multiply hours at each rate during the look-back period, add the products, then divide by total hours. A worker who logged 40 hours at $16 and 20 hours at $20 in four weeks has a weighted rate of (40 × $16 + 20 × $20) ÷ 60 = $17.33. Use that blended rate to compute holiday pay, and write the method into policy so payroll applies it the same way each time.
When the Part-Time Employee Works the Holiday
Federal law does not require premium pay for working on a holiday. The FLSA has no time-and-a-half or double-time rule for holiday shifts.3eCFR. 29 CFR 778.219 – Pay for Forgoing Holidays and Unused Leave Any premium comes from the employer’s policy or a union contract.
When a policy does offer a holiday premium, the pay splits into two components: the premium rate for hours actually worked, and, if the policy also provides idle holiday pay, a separate payment computed by one of the methods above. A part-timer earning $18 an hour who works a 5-hour holiday shift at time-and-a-half gets $27 per hour for those 5 hours, or $135, plus any separate holiday benefit the policy specifies. Both should show as distinct line items on the pay stub. If the policy provides only one of the two, the employee gets only what the policy specifies.
Effect on Overtime
Holiday pay for a day the employee stayed home does not count toward the 40-hour overtime threshold. Under the FLSA, overtime is triggered by hours actually worked in the workweek.4U.S. Department of Labor. Overtime Pay A part-timer who works 36 hours and receives 4 hours of holiday pay shows 40 hours on the paycheck but 36 hours of work. No overtime is owed.
Holiday pay also stays out of the “regular rate” used to calculate the overtime premium. Federal law excludes payments for periods when no work is performed, including holidays, from the regular rate.5Office of the Law Revision Counsel. 29 U.S. Code 207 – Maximum Hours Where a part-timer both works the holiday and receives a separate holiday benefit, only the pay for hours worked feeds the regular rate.6U.S. Department of Labor. Fact Sheet 56A – Overview of the Regular Rate of Pay Under the FLSA
One caveat: if the handbook voluntarily counts holiday hours as hours worked for overtime, that policy controls. The FLSA sets the floor, not the ceiling.
Salaried Exempt Part-Time Staff
If a part-time employee is salaried and exempt from overtime, and the business closes for a holiday, you generally cannot dock the salary. The FLSA prohibits deductions from an exempt employee’s pay for absences caused by the employer or by the operating requirements of the business.7U.S. Department of Labor. FLSA Overtime Security Advisor – Compensation Requirements A holiday shutdown is the employer’s decision, so the full salary for that workweek is still owed. Improper deductions can also jeopardize the exemption itself, potentially exposing the employer to retroactive overtime liability.
Holiday Pay During FMLA Leave
When a holiday falls while a part-time employee is on FMLA leave, whether holiday pay is owed follows the employer’s rules for other kinds of leave. The employee’s entitlement to holiday pay during FMLA leave matches the policy for providing that benefit during other forms of leave.8U.S. Department of Labor. FMLA Advisor – Maintenance of Employee Benefits If workers on other unpaid leaves do not get holiday pay, neither does the FMLA employee. If they do, the FMLA employee must be treated the same.
Payout at Termination
Federal law does not require a payout of accrued but unused holiday pay when a part-timer leaves. The FLSA does not address payment for time not worked at separation.9U.S. Department of Labor. Vacation Leave State wage payment laws may require payout when the employer’s policy or contract promises it, and state rules vary widely on timing, from immediate payment through the next regular payday. If the handbook says accrued holiday pay is forfeited at termination, that language usually controls; if the handbook is silent, some states default to requiring payout. Any holiday pay included in a final check is taxed and withheld like any other wage payment.
Tax Withholding
Holiday pay is ordinary income. It appears on the W-2 and is subject to federal income tax withholding and FICA the same as regular wages.10Internal Revenue Service. Publication 525 (2025), Taxable and Nontaxable Income For 2026, FICA on the employee side is 6.2 percent for Social Security on wages up to $184,500 and 1.45 percent for Medicare, totaling 7.65 percent, matched by the employer.11Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide
Federal income tax withholding depends on how the payment is delivered. When holiday pay replaces a shift the employee would otherwise have worked, withhold at the regular wage rate. When it lands as a separate lump sum on top of regular wages, it can be treated as supplemental wages, in which case the employer may withhold a flat 22 percent for federal income tax instead of using the W-4 tables.11Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide Either way, list holiday pay as a separate line on the pay stub so the employee can verify the amount.