Holiday Pay Rules for Restaurants: What US Operators Owe (and What They Don't)
Thanksgiving is on a Thursday (like always), Christmas and New Year's Day both land on Fridays, and somewhere between now and then a server is going to ask whether they get time and a half for working one of them. If you've ever hesitated before answering, you're in good company. The rules that actually apply to a restaurant are simpler, and less generous, than most people assume.
Here's what US federal law requires, how overtime really works during a holiday week, where tipped employees fit, and which states add rules of their own.
A note before we start: this article is general information, not legal advice, and it reflects the rules as we understood them on November 1, 2026. Wage and hour law changes, and it varies by state and sometimes by city. Before you set or change a policy, confirm the current rules with your state labor department or an employment lawyer.
What Federal Law Actually Requires
Less than you'd think. The Fair Labor Standards Act, the federal law that sets minimum wage and overtime, does not require payment for time not worked, including holidays, and it does not require extra pay for weekend or night work. The Department of Labor's own wording is that these benefits are "generally a matter of agreement between an employer and an employee."
So under federal law, a restaurant is not required to give anyone Christmas off, pay anyone for a holiday they don't work, or pay a premium rate to the people who do work it. Whatever you do on those three counts is your policy, not the law's.
That doesn't mean nobody does it. In March 2026, 81% of private industry workers had access to paid holidays, according to the Bureau of Labor Statistics. Paid holidays are common because they help you hire and keep people, not because a statute demands them.
If you take one thing from this article: federal law sets no holiday pay rules for restaurants. Your written policy does.
Your Policy Is the Rule
Because federal law is silent, the document that governs holiday pay in most restaurants is the employee handbook, the offer letter, or whatever was said during onboarding. So the policy needs to answer the questions your staff will actually ask. Which days count as holidays, given that you may be open on most of them? Who is eligible? Is a paid holiday a day off with pay, a premium for working, or both? What happens when a holiday falls on someone's day off? If the handbook doesn't say, the answer becomes whatever the last manager told the last person who asked, and that's how two cooks end up paid differently for the same shift.
And don't put anything in the handbook you're not prepared to pay every eligible person, every time, at every location.
How Overtime Works in a Holiday Week
Overtime under the FLSA is owed on hours actually worked over 40 in a single workweek, at no less than one and a half times the employee's regular rate. Three details matter during the holidays:
- Paid time off doesn't count toward the 40. The Department of Labor is explicit that paid time off for a holiday is not hours worked and need not be included in the total for overtime purposes. If a line cook works 36 hours and you pay them eight hours of holiday pay for Christmas Day, that's 44 hours of pay but 36 hours of work. No overtime is owed.
- Working a holiday doesn't trigger overtime by itself. The FLSA does not require overtime pay for work on Saturdays, Sundays, or holidays as such. A 10-hour Thanksgiving shift is 10 regular hours unless the week's total passes 40.
- Weeks can't be averaged. A 48-hour Thanksgiving week followed by a 32-hour week is eight hours of overtime, not two normal weeks. Averaging hours over two or more weeks is not permitted.
If you choose to pay a holiday premium of at least one and a half times the regular rate, that premium can be excluded from the regular rate and credited toward overtime owed for the same week, so you generally don't pay time and a half on top of time and a half for the same hours. A smaller premium is treated differently; confirm with your payroll provider before you set the number.
The takeaway: overtime is about hours worked past 40 in one week, and holiday hours aren't special unless your policy makes them special.
Tipped Employees on Holidays
Nothing in federal law changes for tipped staff on a holiday, but their overtime math is already different, and a busy holiday week is when it goes wrong.
Under the FLSA, an employer using the tip credit must pay a tipped worker a cash wage of at least $2.13 an hour, with a maximum federal tip credit of $5.12. When that server passes 40 hours in Christmas week, overtime must be calculated on the full minimum wage, not the cash wage. You also can't take a bigger tip credit on an overtime hour than on a regular one.
Many states set a higher minimum wage, a higher tipped cash wage, or no tip credit at all, which changes every number above. Confirm each location's payroll is using its state's rate.
States With Their Own Holiday Pay Rules
Please read this section carefully, and then go check your own state. The rules below are what we could confirm from state government sources as of November 1, 2026. They are not a complete survey of every state and city, they are not legal advice, and they may have changed by the time you read this. Each one links to the state agency so you can read the current version yourself. If your state isn't mentioned, that doesn't mean it has no rules that touch holiday scheduling or pay.
Rhode Island
Under R.I. General Laws § 25-3-3, work performed on Sundays and on the state's legal holidays, which include Thanksgiving, Christmas, and New Year's Day, must be paid at least one and a half times the employee's normal rate, and refusing to work a Sunday or holiday is not grounds for discipline. The statute lists a handful of exempt employers, such as certain manufacturers and airport car rental companies, and restaurants are not among them. The state's Department of Labor and Training regulations add further detail on how the premium is applied. If you operate in Rhode Island, this is the one to review with your payroll provider or a Rhode Island employment lawyer before Thanksgiving, not after.
Massachusetts
Massachusetts is the example people remember and get wrong. The state's "blue laws" once required certain retailers to pay premium rates on Sundays and holidays, but that premium pay requirement ended on January 1, 2023. What remains is a set of rules about which businesses may open on which holidays and whether employees can be required to work them. Restaurants, including take-out, are specifically exempt from the "voluntariness" requirement and may operate on Sundays and holidays. Federal overtime still applies to hours over 40, holiday hours included.
Everywhere Else
Rhode Island is the only state where we confirmed, from the statute itself, a premium pay requirement for holiday work that applies to restaurants. We did not review every state and municipality, and many have rules that aren't about premium pay but still affect a holiday week: day-of-rest laws, reporting-time pay when a shift is cut short, predictive scheduling ordinances in certain cities, and paid-leave laws. The Department of Labor keeps a directory of state labor offices; your state's page is the right place to confirm what applies to you.
If You Have Locations in Canada
Canadian rules are different in kind, not just degree. Statutory holiday pay is a legal entitlement in every province, with its own eligibility rules and calculation formulas, and it changes by province. We cover that separately in The Canadian Stat Holiday Guide for Restaurant Owners and in province-specific guides for Ontario, British Columbia, Alberta, Manitoba, and Saskatchewan.
Restaurant Holiday Pay FAQs
Do Restaurants Have to Pay Time and a Half on Holidays?
Not under federal law. The FLSA doesn't require premium pay for holiday work, so time and a half on Thanksgiving or Christmas is a policy choice unless your state says otherwise. Rhode Island is one state that does require it; check your own state's rules.
Does a Paid Holiday Count Toward Overtime?
No. Federal overtime is based on hours actually worked over 40 in a workweek. Eight hours of holiday pay for a day not worked doesn't count toward that threshold.
Can I Require Employees to Work on a Holiday?
Under federal law, yes. Some states limit this; Rhode Island, for example, protects employees who refuse Sunday or holiday work. Check your state's rules.
What to Do Before Thanksgiving
Read the handbook's holiday section as if you were a new hire. If it doesn't answer the questions above, fix it and tell the team before the schedule goes up. Confirm with your payroll provider that unworked holiday hours stay out of the overtime calculation and that any premium is handled correctly. And if you have a location in Rhode Island, Massachusetts, or a city with a scheduling ordinance, read the state page linked above. None of this takes long, and all of it is cheaper than finding out in January.
