If My Company Offers Hourly Employees a Paid Holiday on Monday, Do I Need to Pay Overtime to Employees if They Work Extra Hours Tuesday-Friday?

No, not unless they actually “work” more than 40 hours per week (48 if your company is not covered by federal law). People often (mistakenly) believe that paid time off – e.g. paid vacations or holidays – count the same toward overtime as actual work when calculating overtime pay. They don’t. Under federal law, most employees are entitled to two primary things – (1) pay of at least minimum wage for each hour worked, and (2) if they are not exempt, 1.5x their regular rate of pay for all hours “worked” over 40 in a workweek. Paid time off is not “work,” so paid holidays or vacation days don’t count toward this 40 hour threshold.

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