Hello, @TLB99. You're doing a great job setting up time and a half-pay for employees working on federal holidays.

I appreciate you sharing a detailed explanation. In your situation, you can mark the holiday pay item as exempt so it will not affect your workers' compensation calculations.

Here's a step-by-step guide:

1. Go to the Employees menu. Select Pay Employees.
2. Choose Unscheduled Payroll. Tick the worker you want to pay.
3. Press the Open Paycheck Detail button.
4. Pick the Federal Holiday item you created.
5. Head over to the WC CODE column, then set it to Exempt.
6. Once done, hit Save & Close.
    

I recommend consulting your accountant for additional advice and options in handling this matter.

For additional guidance on managing payroll and employees, you can refer to these resources:

• Set up, change, or delete employee-paid payroll deductions.
• Edit, delete, or void employee paychecks.
• Customize payroll and employee reports. 

By marking the payroll item as exempt, it will not affect workers' compensation calculations. Feel free to reach out for further assistance in setting up payroll items and managing your employees. Have a good one, @TLB99!