In 2023, federal employees will be granted 11 paid holidays, but many private sector employers have questions about observance dates, observance best practices, and how federal holiday timelines will impact payroll scheduling and policy.
In this article, we’ll offer an overview of forthcoming federal holidays in 2023 and offer guidelines on how to prepare payroll and other facets of your business for federal, as well as state holidays.
Overview and Private Sector Best Practices
The paid holiday schedule for public sector employers, as well as many nonprofits and state and local governments, aligns with the federal holiday schedule. Of course, private sector employers are increasingly aligning their own paid holiday schedules with the federal holiday schedule, as well. Data from the Bureau of Labor Statistics in 2022 shows that 81% of private sector employees are offered paid holidays, with employers offering eight paid holidays yearly (on average).
Some employers offer paid holiday time for all federal holidays, as well as other paid holiday time for birthdays or through supplemental “floating” holiday time that can be used at the employee’s discretion. Employees represented by a union receive holiday pay based on the terms outlined in their collective bargaining agreement. Most private sector employers articulate their paid holiday policy in the employee handbook or employee contract.
Although the Fair Labor Standards Act (FLSA) does not strictly mandate holiday pay or paid time off for vacation or holidays, the vast majority of private sector businesses offer this, especially in an increasingly competitive hiring market where benefits and perks packages are constantly evolving.
Paid holiday policy sometimes varies on the basis of industry, employee status (part-time, full-time, etc.), and other factors. In the industries where it’s applicable, private sector employers often pay time-and-a-half or double pay to employees who work on any federal holiday, especially hourly and on-call workers. Similarly, some companies grant comp time to salaried employees who choose to work on a holiday, which allows them to reallocate the paid time off to another day or time.
Federal Holidays in 2023 and Payroll Implications
Below, we’ve listed the 11 federal holidays that will be observed by the U.S. Government in 2023. In each case, the designated observation date is listed. Each holiday listed is both a legal and banking holiday. This list is designed to help your business plan for IRS tax deposits and to adjust payroll processing timelines to account for the dates listed below.
Note: As a general rule, for federal holidays that fall on a Saturday, federal employees are granted the preceding Friday off. Similarly, for holidays that fall on Sunday, federal employees are granted the following Monday off to observe the holiday. Most private-sector employers mirror this holiday observation policy. Where this scenario applies, “Adjusted Observation Day” is noted.
Monday, January 2, 2023 – New Year’s Day (Adjusted Observation Day)
Monday, January 16, 2023 - Martin Luther King, Jr. Day
Monday, February 20, 2023 - Presidents’ Day
Monday, May 29, 2023 - Memorial Day
Monday, June 19, 2023 - Juneteenth
Tuesday, July 4, 2023 - Independence Day
Monday, September 4, 2023 - Labor Day
Monday, October 9, 2023 - Columbus Day
Friday, November 10, 2023 - Veterans Day (Adjusted Observation Day)
Thursday, November 23, 2023 - Thanksgiving
Monday, December 25, 2023 - Christmas Day
State laws and state-wide holidays can also impact paid and unpaid holiday requirements for private-sector employers. For example, some states have passed laws that require employers to provide employees who are veterans paid or unpaid time off on Veterans Day. Iowa, Massachusetts, New Hampshire, Oregon, and Tennessee have already passed legislation with distinct policies regarding time off for Veterans Day, with more states expected to adopt similar laws in the near future.
It's also important for private-sector employers to stay mindful of state-wide holidays. Whether an employer chooses to allow employees to observe these holidays or offer holiday pay will vary, but dates should be kept in mind for payroll purposes since many state holidays are observed by banks and state governments.
Whether it’s the multiple state holidays in Wisconsin, Hawaii, and Georgia, or the shifting premium pay laws in Massachusetts, Rhode Island, and other jurisdictions, private sector employers should plan payroll around any holidays or regulations that could impact payroll scheduling in 2023 and beyond.
Optimize Payroll with CAVU HCM
We’ve created this quick and easy reference for federal holidays to help your business stay on track in 2023, but there are many important dates, regulations, and compliance considerations that impact payroll processing, which can be difficult to navigate without professional support. CAVU HCM offers a comprehensive payroll solution designed to help your business run payroll efficiently while implementing an appealing and sustainable PTO policy that boosts employee satisfaction and engagement.
Ready to streamline payroll and start planning ahead for holiday pay and time off? Contact us today to let us support your process.