PTO Calculator Logo PTO Calculator
Back to All Guides

What Are Floating Holidays? A Complete Guide

When you check your employee portal, you might notice two separate balances: one for your standard PTO, and a smaller one for "Floating Holidays." But what exactly is a floating holiday, and how is it different from a regular vacation day?

A floating holiday is essentially a paid day off that an employee can use at their own discretion, acting as a substitute for a fixed public holiday. Most employers offer 1 to 3 floating holidays per year.

Why Do Companies Offer Floating Holidays?

There are two primary reasons employers utilize floating holidays:

  • Diversity and Inclusion: The standard American corporate calendar only observes major Christian holidays (like Christmas) and federal holidays. Floating holidays allow employees of diverse faiths and backgrounds to take paid time off to observe their own religious or cultural holidays (like Yom Kippur, Eid al-Fitr, or Diwali) without having to dip into their earned vacation time.
  • Flexibility: Rather than forcing the entire company to take off the day after Thanksgiving, an employer might grant everyone a floating holiday, allowing employees to choose when they want their extra day of rest.

Floating Holidays vs. Regular PTO

While they function similarly when you request them, the underlying HR rules are often different:

  • Accrual: PTO is usually accrued per pay period. Floating holidays are typically granted as a lump sum at the beginning of the calendar year (or upon hire).
  • Carryover: While many companies allow you to carry over a certain amount of PTO into the next year, floating holidays almost never carry over. It is "use it or lose it" by December 31st.
  • Payouts: In states where employers are legally required to pay out unused PTO when you leave a job, they are often not required to pay out unused floating holidays, since they are tied to specific events rather than earned wages. Always use your floating holidays first!

How to Manage Them

Because floating holidays expire, you should always use them before touching your standard PTO balance. In our PTO Calculator, you can open the Advanced Settings and toggle Use Floating Days First. This ensures that the Goal Predictor properly models your time-off usage by consuming those expiring floating days before dipping into your hard-earned PTO hours.