Payday on a holiday is not a new phenomenon.
However, when banks and financial institutions are closed on the holiday, it may present some interference with the normal payroll schedule.
The workers depend on you to bring home the wages, and the delayed processing of a pay cheque can erode trust, morale, money - or all three. For companies, late payroll is not just a pain. It can result in compliance issues, penalties, or reputational harm.
A holiday or no holiday is more than simply switching dates; it takes planning, understanding of laws affecting pay periods, and communication. Employers that do not plan accordingly simply run the risk of the transaction being complicated and having to rely on the bank generally. On the other hand, an employer that has a systematic approach to payroll will not have to deal with any interruptions whatsoever.
This article highlights the best practice for processing payroll when payday is a holiday. Employers can: adjust pay schedules, use automation and compliance to their advantage, and make sure that business operations and employee confidence are protected.
When payday coincides with a holiday, payroll scheduling can be disrupted. Banks, clearinghouses, and financial institutions are closed on federal/state holidays, and employee wages will not be deposited until the proper payroll adjustments have been made. This can lead to legal risks, compliance concerns, and potentially upset employees.
Employees depend on a predictable and timely wage. Even a slight delay in payroll can cause someone financial difficulty, namely, someone who has automated payments (i.e., bills) set around the payday, even a 24 to 48-hour delay may create problems. Employers need to understand the various consequences and deliberate on how to manage them. Also, it becomes difficult to manage the employee experience.
More often than not, there are organizations that choose to run payroll early so employee wages can be made available before the holiday. This often promotes trust and confidence with employees and minimizes any compliance or legal concerns.
On occasion, some organizations may delay payment until the next business day following a holiday. This type of scheduling, while allowed in some jurisdictions, can create employee frustration and possibly begin the process of employee grievances. If delayed beyond a holiday, some jurisdictions can create regulatory concerns.
Certain organizations have fixed policies in place that trigger payroll runs to adjust when holidays fall on a pay date (for example, if a holiday falls on the payday, payments may automatically be scheduled 1-2 days in advance).
There are different regulations from state to state. Some laws require payment to employees on or before the scheduled payday, while others permit processing the next business day. These nuances affect the employer obligation requirements, and employers should be cognizant of how to avoid penalties.
Inability to anticipate and accommodate holiday-related payroll issues can create challenges related to compliance and employee morale.
Employees who fail to receive their paycheck on the payday indicated on the pay schedule will lose confidence in your organization and the individuals responsible for payroll.
This can negatively impact employee engagement as well as lead to an increased amount of turnover. From a liability standpoint, failure to process payroll on the payday identified within the schedule can lead to freight wage claims or fines.
Based on the challenge of holiday-related payroll could be anticipated, it seems reasonable to think employers can implement some considerations or allowances to adjust their payroll schedule.
The most effective strategy is to proactively work in advance to develop and communicate who, when, and how your employees will be compensated if an organization encounters holiday-related payroll challenges.
Payroll disruptions can be avoided by employers by preparing in advance and establishing effective policies. The following measures involve quoted advice from reputable sources.
ADP's 2025 payroll calendar monitors pay periods and federal holidays, which enables employers to schedule payroll. It emphasizes processing weeks and holiday closures according to various pay frequencies (weekly, biweekly, semi-monthly).
Employers using this calendar can plan and modify payroll runs on time, making payments prior to holidays interfere with banking.
Employee pay through direct deposit might not be processed if payday coincides with a bank holiday, says SurePayroll (by Paychex), making planning a necessity.
Automation assists by identifying such holidays and modifying processing cycles in advance automatically, minimizing errors through human neglect and guaranteeing on-time delivery.
Recent research by Patriot Software shows how important an employee to get paid on time. According to Patriot Software, 65% of U.S. workers live paycheck to paycheck; therefore, timely payroll is paramount.
This is just one of the many reasons employers, when a holiday falls near or on payday, would often process payroll one business day early to ensure employees' check is cashed and there aren't any bank delays in payment processing.
According to the SHRM 2024 annual report, the most recent 2023 SHRM research, it's also worth noting that as of 2025, the vast majority of employers still provide paid time away from work and paid holidays. Paid vacation, paid holidays, and paid sick leave are seen at 96% or more rate from US employers.
Having a formal holiday payroll policy is important. A formal policy builds clarity around expectations and can provide employees with information regarding common employer practices related to both leave and payroll surrounding the holiday.
If you anticipate payroll issues around the holiday period and build in systematic practices to be able to do so, you can create certainty and maintain employee confidence.
Simultaneously, it is important to know and understand the labor laws to ensure you don't incur penalties, legal actions, or reputational risk.
The following section considers the important compliance issues that businesses should consider when payday lands on a holiday.
Holidays can pose more than just convenience for employers when it comes to payroll. Employers have to comply with both federal and state laws regarding wage payout.
As the DOL (United States Department of Labor) indicates, if a wage is due on a payday but the regular payday falls on a holiday, an employer should still have wages available on or before the payday of the covered period.
While the federal law is clear on the workplace obligations for wages, states may have their own laws regarding payroll.
California’s Division of Labor Standards Enforcement clearly indicates “wages are due and payable no later than the designated payday,” even if a holiday falls on it, while New York State Department of Labor provides for payment on the next business day if the payday falls on a holiday.
Employers with multi-state operations must track these laws to comply with an often-changing compliance landscape.
Employers are obligated to adhere to federal rules: Under the FLSA, wages must be paid on the payday established by the employer.
Employers also need to consider State laws: An employer may have obligations to pay on or before a payday; if they are not ambiguous, some States allow for next business day payment.
Employers can be exposed to legal liability if there are delays or issues with employee wages: an employer may be liable under laws for fines, interest, publicity, or direct employer losses.
Employers should have written policies to document how holiday or altered paydays are made consistent.
It is a best practice to notify employees of any changes to schedules in advance to avoid confusion.
By dealing with both federal and State obligations, employers can not only ensure that employees get paid fairly and on time, but they can also limit their exposure.
Managing payroll during holidays is more than a scheduling project. Employers are faced with managing operational efficiency while complying with federal and state laws and communicating schedules to employees.
Employers can avoid the delays associated with both compliance and employee confidence in their paycheck with advanced planning, documentation of policies, and employing new technology payroll systems. When paychecks are presented on schedule, no matter what happens during a holiday disruption, Employers demonstrate their dependability and trust with their workforce grows.
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