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, with the first observance of Labor Day likely taking place in 1882 when 10,000 workers paraded in New York City.

But is Labor Day a paid holiday? Not by federal law. Still, many employers choose to offer it—in fact, among workers who receive paid holidays, 91 percent received Labor Day as a paid day off—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.

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

No, employers are not required to offer Labor Day as a paid holiday. The Fair Labor Standards Act (FLSA) doesn't mandate holiday pay for private employees, though many companies choose to provide it as a competitive benefit.

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As of 2025, federal employees must receive paid time off (PTO) for recognized federal holidays—the U.S. government officially recognizes 11 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 as part of a competitive compensation package.

According to 2024 Bureau of Labor Statistics (BLS) data, here's what most private-sector workers receive:

• Paid holidays: 81% of workers
• Paid vacation: 80% of workers
• Paid sick leave: 79% of workers

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.

An overview of the implications of holiday pay

Here's what the law actually requires: The Fair Labor Standards Act (FLSA) doesn't mandate paid holidays or premium pay for private employers. You only need to pay employees for hours worked, unless your employee handbook or company policy says otherwise.

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.

Can employers require employees to work on Labor Day?

Yes, private employers in the U.S. can require employees to work on Labor Day. Here's what you need to know:

• Federal law: The FLSA doesn't prohibit requiring holiday work
• Premium pay: Not federally required, but check your contracts
• Special agreements: Union contracts may have specific holiday work clauses

While not legally required, many companies that operate on holidays offer premium pay—like time and a half—to reward employees and maintain morale. Essential services like healthcare, emergency response, retail, and hospitality often stay open, and employees in those industries may be scheduled to work. This is reflected in government data, which shows that while 97% of professional workers receive a paid Labor Day holiday, only 84% of workers in service occupations do.

In some cases, local or national labor laws may require premium pay or compensatory time off for working on a public holiday, but the rules vary by country and jurisdiction. Countries like France or Mexico often have stricter rules requiring holiday premiums for working on their respective Labor Day dates (typically May 1).

What conditions can employers set for Labor Day holiday pay eligibility?

Want to prevent those mysterious "sick days" around long weekends? You can absolutely set conditions for holiday pay eligibility.

Common requirements include:

• Work the day before and after: Prevents unscheduled absences
• Document everything: Include policies in your employee handbook
• Apply consistently: Same rules for all eligible employees

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.

How does Labor Day holiday pay work around the world?

Labor Day looks different around the world. Here's the breakdown:

• May 1 (International Workers' Day): 160+ countries including Brazil, Germany, Mexico, and France—many require paid time off. This date originates from the struggle of workers for daily working hours in the 1880s.
• September (like the U.S.): Australia, Canada, Japan, and New Zealand
• UK variation: Early May Bank Holiday (first Monday in May)

Building competitive holiday policies for your team

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.

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.