Do employers have to offer holiday pay on Labor Day?

Labor Day is one of the most widely observed holidays in the United States—a long weekend that signals the end of summer and gives many a well-earned break. Celebrated on the first Monday in September, it honors the contributions of workers across the country. 

But is Labor Day a paid holiday? Not by federal law. Still, many employers choose to offer it, boosting morale and helping attract and keep great talent.

In this guide, we’ll explain the legal context and key considerations for offering Labor Day as a paid holiday in the United States, with a brief look at how similar holidays are observed in other countries.

An overview of the implications of holiday pay

In the U.S., the Fair Labor Standards Act (FLSA) doesn’t require private employers to offer paid holidays or premium pay for working on a holiday. Employers must only pay staff for hours worked, including overtime, when applicable. If an employee takes a holiday off, the employer doesn’t have to compensate them unless it’s outlined in company policy, such as an employee handbook.

However, businesses that do provide holiday pay often see higher employee satisfaction and stronger retention. Some also offer premium pay to employees who work on federal holidays like Labor Day.

Do employers have to offer Labor Day as a paid holiday?

It’s not illegal to work on Labor Day—or other national holidays. Private employers don’t have to offer premium pay, such as time and a half on Labor Day, to employees who work federal holidays. However, when they do, it’s common for employees to be paid for the day even if they don’t work.

As of 2025, federal employees must receive paid time off (PTO) for recognized federal holidays, including Christmas Day, one of the most widely observed holidays across both public and private sectors. Here's the complete list of holidays for which U.S. federal employees are entitled to holiday time with pay:

• New Year's Day
• Martin Luther King Jr. Day
• Washington's Birthday (Presidents’ Day)
• Memorial Day
• Juneteenth National Independence Day
• Independence Day
• Labor Day
• Columbus Day (Indigenous Peoples' Day)
• Veterans Day
• Thanksgiving Day
• Christmas Day

That said, it’s common for private-sector employers to offer paid holidays, often matching the federal calendar. Many also include additional holidays, vacation time, paid sick leave, and PTO as part of a competitive compensation package. According to 2024 Bureau of Labor Statistics (BLS) data, 81% of private-sector workers receive paid holidays, 80% receive paid vacation, and 79% receive or accrue paid sick leave. 

However, there’s a clear gap in access, especially when it comes to sick leave. According to the Economic Policy Institute, paid sick leave is available to 94% of the highest-paid 25% of private-sector workers, but only 58% of the lowest-paid 25% receive the same benefit. 

How does Labor Day holiday pay work around the world?

Labor Day isn’t just a U.S. observance—many countries recognize their versions of the holiday, often on different dates and with unique rules around paid time and holiday pay.

More than 160 countries, including Brazil, Germany, Mexico, and France, celebrate International Workers' Day (essentially their Labor Day) on May 1. In many of these countries, employees are legally entitled to PTO. Some also require premium pay when employees work on the holiday. 

Along with Australia, Canada, Japan, and New Zealand, the U.S. doesn't observe International Workers' Day. In the United Kingdom, the first Monday in May is known as the Early May Bank Holiday and is unofficially associated with International Workers' Day.

Offer holiday pay compliantly with Oyster

Labor laws regarding public holidays, time off, and premium pay vary widely from country to country, and what's standard in one may be completely different in another. If you’re managing a distributed team, understanding holiday pay regulations is key—not just to keep you compliant but to also stay competitive. 

Paid holidays are a foundational part of any strong benefits package. They support well-being, boost satisfaction, and improve retention—wherever your team works. With Oyster, it’s easy to offer and manage paid holidays around the world. Oyster’s Total Rewards keeps your policies aligned with local laws and helps you build a benefits package that works across borders.

Book a demo to explore how Oyster can help you stay compliant in more than 180 countries. 

Frequently asked questions (FAQs)

Who works on Labor Day?

In the United States, Labor Day is a federal holiday, which means all federal employees are entitled to a paid day off. For the private sector, it's optional, but the majority of employers choose to close operations and provide the day off with pay. Still, many essential services, like healthcare, emergency response, retail, and hospitality, often stay open, and employees in those industries may be scheduled to work.

In some cases, local or national labor laws may require premium pay (such as time and a half or double time) or compensatory time off for working on a public holiday, but the rules vary by country and jurisdiction.

Can companies require employees to work on Labor Day?

Yes, employers can require staff to work on Labor Day, especially in sectors that operate year-round or are designated essential services. In the U.S., there’s no federal law mandating time off or additional pay for working on Labor Day. However, a company’s employee handbook, employment contract, or union agreement may offer paid time off or holiday pay.

Conversely, countries like France or Mexico often have stricter rules requiring holiday premiums for working on their respective Labor Day dates (typically May 1).

Can employers require workers to work before and after Labor Day to qualify for a paid holiday?

Yes, this is a common practice, especially in the U.S. and Canada. Many employers include a policy stating that employees must work their scheduled shifts before and after a federal holiday (like Labor Day) to receive holiday pay. This aims to discourage absenteeism around long weekends.

If you implement this policy, make sure it’s clearly stated in writing—usually in your employee handbook—and review it regularly to ensure compliance with applicable labor laws in each jurisdiction.

What if Labor Day is also payday?

If your regular payday falls on Labor Day and your business is closed, you may need to issue payment earlier or on the next business day, depending on local payroll laws.

For example, some U.S. states prohibit delayed wage payments, even due to a holiday, under their wage and hour laws. In the U.K. or Australia, employers may shift pay schedules around public holidays, provided it's communicated in advance and doesn’t delay access to earned wages.

Do holiday hours count toward overtime?

Not usually. If a nonexempt employee works 40 hours and also receives holiday pay for Labor Day, those holiday hours typically don’t count toward overtime. Under the Fair Labor Standards Act (FLSA) in the U.S., overtime pay kicks in only after 40 hours worked—not 40 hours paid.

However, collective bargaining agreements, company policies, and employment contracts may offer additional compensation or treat holiday pay differently. It’s always best to check your local labor laws and internal policies.

About Oyster

Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.

Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.