There are dozens of observed holidays in the United States. Some are recognized at a federal level, while others are state-level holidays. Holidays can be religious, political or secular.
With so many holidays celebrated by American workers, employers may find it difficult to determine which holidays they should observe by offering their employees paid time off. We’ll explain the factors involved in your holiday decisions and share the benefits of offering paid holidays as part of your employee benefits package.
Editor’s note: Need employee scheduling software for your business? Fill out the below questionnaire to have our vendor partners contact you with free information.
Before you can put a paid time off (PTO) policy on the books, you should understand which holidays are part of the American work culture to help you determine what’s right for your business. These are the primary holiday types:
The federal government designates federal holidays. By law, all government agencies and banks must close for the day in observance. It’s not illegal for private-sector businesses to remain open on public holidays, and companies aren’t forced to offer employees paid time off. Still, the federal government expects that non-government businesses will also observe these holidays.
There are 10 federal holidays that government agencies and banks close their doors for each year:
“The federal government sets the standards for part of the workforce and certainly expectations for the rest,” said Karen Williams, district director for the Washington, D.C. SCORE district. “For anyone who works in the government or banking space, those holidays are set in stone.”
If a holiday falls on a weekend, organizations tend to give employees the Friday before or the following Monday off.
In addition to those 10 public holidays, states have the right to institute their own holidays that local government agencies must honor.
Like federal holidays, the private sector usually doesn’t have to abide by state holidays. However, according to the Employment Law Handbook, there are two exceptions: Massachusetts and Rhode Island require private employers to give employees the day off for a state-designated holiday.
State holidays vary from one state to the next. For example, California, Connecticut, Missouri and Illinois give workers time off for Lincoln’s Birthday on Feb. 12. In contrast, Indiana recognizes Lincoln’s Birthday as a holiday on the day after Thanksgiving, and in New York, Lincoln’s Birthday is a floating holiday for state workers (see below for more on floating holidays).
“We [didn’t] observe state holidays at Zenefits as part of our paid time off policy,” said Tracy Cote, former chief people officer at Zenefits (Cote now holds the same role at StockX). “They are common in Canada, where each province observes different holidays.”
Did you know? Twenty states are on board with a two-day Thanksgiving holiday, designating the fourth Friday in November as a distinct state holiday.
Floating holidays are extra paid days off that employees can take in addition to paid holidays. Workers can use floating holidays for religious holidays, special events, birthdays and personal reasons. Not every organization offers floating holidays, but this type of PTO can be a helpful way to avoid conversations about why one holiday is on the calendar and another isn’t.
“Everybody celebrates different things, and everybody wants to take time off for different reasons,” said Ali Fazal, VP of marketing at GRIN.
The most recent figures on floating holidays are from 2017. That year, the Society for Human Resources Management reported that less than three of every 10 employers offer floating holidays. With recent years’ push for workplace diversity and inclusion training, this figure has likely increased since 2017, though no researchers have reported on it yet.
Floating holidays may benefit employers in the following ways:
With so many holidays to choose from, most small business owners select the ones that make the most sense for their employees. To make the selection process a little easier, here’s a list of the most typical paid holidays in the U.S. These holidays are listed from most commonly to least commonly observed with paid time off, as per 2022 Zippia statistics:
Small business owners don’t have to offer their workers all these holidays. Still, Williams said they should consider at least giving employees New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas off.
Small business owners usually can’t afford to give employees every federal and state holiday off, but they need to offer a few to lure talent and remain competitive. That’s why creating an official holiday PTO policy that considers your business’s financial situation and workers’ desires is essential.
Here are the steps business owners should take when creating a PTO policy.
Before you can offer holidays with paid time off, you must determine how many days you can afford. If your benefits budget is big enough, you may be able to give them all 10 federal holidays. If money is tight, it may be just the primary six.
“If the worker won’t be there that day, is the business still generating enough revenue to be able to pay the employee?” Williams advises employers to ask themselves. “The business owner has to look at the cash situation versus how they are doing recruiting people.”
Recruiting new employees and retaining them can be costly, which is why reducing employee turnover is crucial. Consider your competition’s holiday PTO practices when you’re putting your own together. If you don’t, you may find it harder to attract and retain top talent.
At the very least, you want to match what your rivals are doing. If you’re looking for an edge, you may want to add an extra holiday to the mix.
It may be easiest to select some of the most common federal holidays and leave it at that, but a better strategy is determining what your employees want. You may think giving staff the day off for Christmas is a no-brainer, but if most of your workers don’t celebrate the holiday (for cultural or religious reasons, for example), it’s a wasted day off.
“There are so many worthy holidays and observances, it can be hard to decide which ones to select,” said Cote. “As employers, you also have to consider the needs of the business.”
Conduct employee surveys about the holidays they’d prefer to observe with PTO. Your employees may prefer Martin Luther King Jr. Day off rather than Columbus Day, but you won’t know if you don’t ask. Additionally, some employees may have trouble getting to their polling stations on Election Day; if you make that a paid day off, you could build goodwill and loyalty among the ranks.
Your holiday PTO policy doesn’t have to be set in stone. It can be flexible and ever-changing to address the current social climate. For example, in response to the Black Lives Matter movement, Zenefits designated Juneteenth as a permanent paid company holiday starting in 2020. Cote said the company also offers civic and volunteer time off so employees can vote, volunteer or protest.
“As an employer, it’s about doing the right thing and making a difference,” Cote said.
Leading up to Juneteenth 2022, Randstad USA surveyed 1,030 U.S. employees and found that 44% have the day off on Juneteenth. This figure represents an 11% increase from 2021, the first year that Juneteenth was designated an official federal holiday. Among employees who receive time off for the holiday, 49% receive paid time off.
Just because you offer paid time off for a holiday doesn’t mean you can afford to close completely. Offices and banks may be shuttered in observance of Christmas, but a restaurant or bar may remain open.
Before you put a holiday on the books, determine how many employees must work and how much you’ll pay them. If you make Christmas an official holiday but still need staff that day, paying time-and-a-half or double time is a great way to boost goodwill, if your business can afford it.
Paid holidays benefit your employees and your business in the following ways:
Incorporating paid time off for holidays requires upfront work on the business owner’s part. You must determine how much PTO you can afford, its impact on productivity and the bottom line, and what your competitors are doing.
It’s equally important to ensure you give employees the holidays off that they observe and offer floating holidays to add flexibility. If your team can choose their holidays and someone who doesn’t celebrate is able to work, you’re doing it right.
Max Freedman contributed to the reporting and writing in this article. Some source interviews were conducted for a previous version of this article.