What the law actually says about Labor Day
Under the federal Fair Labor Standards Act (FLSA), working a holiday is not a pay event at all. The FLSA requires overtime only after 40 hours in a workweek; it does not require premium pay for holidays, nights, or weekends. The U.S. Department of Labor is explicit that extra pay for holiday work is a matter of agreement between employer and employee.
Labor Day is a federal holiday marking the labor movement. Ironically, the FLSA it shares a lineage with does not require anyone to be paid extra for working it.
So why do so many people get time and a half on Labor Day?
Like Memorial Day it anchors a three-day weekend, so retail, restaurant, and travel employers often schedule premium pay or holiday differentials to fill shifts.
Three things can turn a holiday shift into a premium-pay shift, and none of them is the FLSA:
- Employer policy — a handbook holiday-pay schedule, usually listing which holidays qualify and at what multiplier.
- A union contract — collective bargaining agreements routinely name paid holidays and premium rates, and they are enforceable.
- State law — a small number of states have holiday/Sunday premium rules for certain retail employers. Rhode Island is the most notable; check your own state, because several states that once had these rules have repealed them. Start with the overtime rules by state page.
Holiday pay and overtime are two different things
This is the trap. If you take Labor Day as a paid day off, those 8 holiday hours generally do not count toward the 40-hour overtime threshold — they were paid, but not worked. So a week with a paid holiday plus a couple of extra shifts can total 44 paid hours while producing zero FLSA overtime. If you actually work Labor Day, those hours count normally. Run the full picture in the overtime calculator.
If you are paid double time instead
Some employers pay 2x rather than 1.5x on major holidays — again, by policy. The double time calculator handles that multiplier, and the calculator above lets you set a custom one if your contract uses something unusual.
Taxes on your Labor Day premium
Holiday premium pay is ordinary income — there is no special holiday tax rate. One nuance for 2025 through 2028: the federal deduction commonly called “no tax on overtime” covers the premium portion of FLSA-required overtime. A holiday premium your employer pays voluntarily is generally not FLSA-required overtime, so it usually would not qualify on its own. Size what does qualify with the no tax on overtime calculator. This is general information, not tax advice.
Check every holiday
The answer is the same federal answer for all of them, but observance and typical practice differ. Compare on the holiday pay by holiday page, or get the quick rate math from the holiday pay calculator.