This is an interesting recent event that has begun happening since we have taken on a new TRUSTEE, yes, this is a township.
We are a Union Fire department. We have set Holidays. Our overtime is contracted for over 96 hours in a 2 week period. Pretty straight forward. That is only after 96 hours over the two weeks will overtime be paid. HOWEVER, this is the recent development. If a holiday occurs within this pay period. 12 hours (that is our shift times) are removed from actual hours worked. and placed in holiday pay (1.5 x the normal rate.) Lets now say we received 12 hours of OVERTIME. (as in total of 108 hours worked.) The administration is only crediting us 96 hours of straight pay and 12 hours of Holiday pay. They are in actuality shifting hours around so they do NOT pay 12 overtime and our 12 hours of holiday work time.
Can any shed light onto this? is it legal to NOT pay the overtime since we are contracted at 96 hours? They are saying it is TIERING pay rates.
Thank you in advance.

I take it you're working the holiday (of course you are, this is a fire department). ;)

In a 14-day work cycle, overtime is not due under the FLSA until you have worked over 106 hours (in a 7-day work cycle, it's 53 hours). So, although it's not theoretically correct to reallocate hours worked into holiday pay (and it's a violation of the FLSA recordkeeping requirement that accurate records be kept of all hours worked), I'm not seeing that your PAY is being affected. Unless your union contract provides for it, holiday hours/pay need not be considered when determining overtime. You're still working 96 hours, right?

Yes. We are not true 24/48 hour firefighters. We work 12 hours shifts. 3 days in a row ( i.e. 12 on 12 off.) 36 hour cycles. This puts into 3 pay cycles. 1st cycle being 96 hour pay period. 2nd being 84hr, 3rd being 72.
In the 96 hour cycle. Our administration believes that if we work a "paid" holiday. as in 1.5x hourly rate. That is considered PREMIUM pay. Not factoring it into hours worked. This translate into 84 hours straight time. and 12 hours holiday worked (1.5x) If we work 1 extra shift (12 hours), they are paying us at REGULAR work wage. (1.0x hourly) Union contract states hours worked OVER 96 in a 14 day work cycle are to be considered overtime.(1.5x nourly rate)

I have read in a few threads that holiday worked hours NEED not be included in HOURS worked. Is this true? AND, would this be a Contractual issue when the next contract comes up?
Thank you in advance.

I have read in a few threads that holiday worked hours NEED not be included in HOURS worked. Is this true? AND, would this be a Contractual issue when the next contract comes up?
Thank you in advance.

That is correct. And it can be a negotiated item in your next contract. To be competitive, it may need to be considered as most of my colleagues in (at least larger city) government report that their contracts do include it.