Independence Day falls on a Wednesday this year, which means many workers will be looking to take two days off either before or after the holiday, thereby giving themselves a long weekend.

What does this mean in terms of U.S. payroll legislation? As Business Management Daily notes, many companies make the mistake of including vacation pay or holiday pay in employees' regular rates when it comes to calculating overtime. In fact, vacation pay and holiday pay are categorized as compensation for idle time and should not be included in the regular rate calculation.

The news source also notes that there is no federal or state U.S. payroll compliance law that requires employers to pay their workers for vacations or holidays. Indeed, according to the Department of Labor, any compensation that is provided is "generally a matter of agreement between an employer and an employee (or the employee's representative)."

That said, there are exceptions for government contracts to which the labor standards of the McNamara O'Hara Service Contract Act and the Davis-Bacon and Related Acts apply.

For the full Business Management Daily article, click here.