This may come as a surprise, but federal law does not require employers to pay employees extra, or above normal pay, for working on a holiday. The holidays are typically considered regular workdays and employees receive their normal pay for time worked. The Fair Labor Standards Act (FLSA) requires employers to pay only for time worked. However, many employers provide holidays off or extra pay for working on a holiday. These arrangements are considered employee benefits and are typically included in an Employment Contract.
Also, under federal law, a holiday doesn’t have a special designation for overtime pay nor is working on a holiday considered overtime. Federal law views holidays as just another business day. Under federal law, overtime is calculated weekly. This means if an employee works over 40 hours during the week of typical paid holidays, they are entitled to “time and a half” for the hours worked over 40 hours.
One other point, federal law does not provide for vacation pay. Under the FLSA, employers are not obligated to pay employees for time not worked including vacation days and holidays. Therefore, if an employee takes a vacation day on a holiday, there is no law requiring them to be paid for the time off.
If an employee is entitled to vacation pay, it is based on an agreement between the employer and the employee.