No matter whether your payroll schedule is weekly, biweekly, or semimonthly, it’s inevitable that a payday will happen on a holiday or weekend when banks are closed and payroll and direct deposits can’t be processed. This requires some planning ahead to make sure that you know which holidays or weekends might affect your payroll during the year so your employees can get paid accurately and on time.

Generally, you must run your payroll on the prior business day or after the bank holiday. The same is true when a payday falls on a weekend, where you can pay employees the Friday before or Monday after the weekend. For holidays falling on Saturday, the Federal Reserve Banks and Branches will be open the preceding Friday. For holidays falling on Sunday, all Federal Reserve offices will be closed the following Monday.

Below is a list of holidays observed by the Federal Reserve, the central banking system for the U.S. When the Federal Reserve is closed, so are other banks and no money is going in or out. It’s best to sync their schedule with yours to ensure you have adequate time to prepare for upcoming holidays that may impact your payroll processes.

Observed holidays by the Federal Reserve

2019 2020
New Year’s Day January 1 January 1
Martin Luther King, Jr. Birthday January 21 January 20
George Washington’s Birthday February 18 February 17
Memorial Day May 27 May 25
Independence Day July 4 July 4
Labor Day September 2 September 7
Columbus Day October 14 October 12
Veterans Day November 11 November 11
Thanksgiving Day November 28 November 26
Christmas Day December 25 December 25

For observed holidays through 2023, click here.


Running payroll is one of the most important things you can do for your employees. If they aren’t paid on time and accurately you can expect major backlash, and understandably so. They have bills to pay and things to do. When holidays roll around and change the schedule, there are a few things to keep in mind.

  • Be consistent with payroll scheduling. If you’re going to pay on Friday before a holiday or weekend, try to always do that.
  • Tell your employees when they are going to get paid, especially when payroll schedules might be irregular around holidays. They should always know when to expect money in their accounts or when to pick up a check. If you pay your employees in cash, this isn’t a big deal because you might not need a bank for that, but if you do direct deposit, the banks won’t be open to transfer the funds or to deposit or cash a check.
  • Keep your payroll team or payroll outsourcing company aware of payroll policies. If you have a specific schedule you follow or have to change the payroll deadlines, make sure everyone else on your team is prepared to meet those deadlines.
  • Keep employee information updated. When you run your last payrolls of the year and process W2s you want to have correct employee names and addresses so you don’t have to worry about correcting or have tax filing errors.

About Us

As a PEO, XcelHR can run payroll for your businesses. Outsourcing payroll to us helps manage costs, mitigate risks and reduce the burden of administrative-driven tasks. Time and attendance, payroll self-service portal, year-end employee tax form distribution and printing, payroll tax prep and filing, garnishment administration, check printing and distribution, direct deposit, and more. We have controls in place to ensure compliance and payroll accuracy, and process and technology improvements to improve productivity. For holiday payroll schedules for XcelHR clients, click here.

To learn more about XcelHR or talk to a representative, contact us here.