An employee is on a “block” FMLA leave, do paid holidays count as FMLA days?

Yes, during a block FMLA leave, where the employee is taking the entire week off as FMLA leave, any holiday during that workweek is counted as part of the FMLA leave.  For example, if the employee is taking FMLA leave in a “block” for the period of November 15 through January 10 – if the Thanksgiving, Christmas and New Year’s holidays fall during a typical workweek – those holidays will be counted as FMLA days.