Chances are that your 2023 payroll calendar looks very much like your 2022 payroll calendar did. Most employers stick to the same payroll schedule year after year. However, it makes sense to reevaluate your business practices every so often—and that includes your payroll calendar.
The key question: is your current payroll schedule working for you and your employees—or is there a better option out there? Let’s review the four standard payroll schedules, their pros and cons, and the compliance considerations.
The Weekly Payroll Calendar (Once a Week)
Employers on a weekly pay schedule run payroll 52 times a year—i.e., once a week. According to the Bureau of Labor Statistics (BLS), 27% of U.S. companies follow a weekly payroll calendar, making it the second most popular pay frequency.
Employees like weekly pay schedules, because it improves their cash flow—and since 64% of U.S. workers live paycheck to paycheck, that’s a big plus. As on-demand pay becomes more popular, weekly pay is the next best thing.
For employers, however, the weekly payroll calendar is the most expensive, time-consuming option—one that places greater demands on company cash flow, too.
The Biweekly Payroll Calendar (Every Two Weeks)
According to the BLS, 43% of employers follow a biweekly payroll calendar—the most popular choice. Here, employees are paid every two weeks (usually every other Friday), or 26 times a year.
One big benefit of the biweekly pay schedule is its predictability for both employers and employees. Another advantage for employers: it’s more cost-effective and less labor-intensive than weekly payroll processing.
On the other hand, under this method, employers end up processing three payroll cycles in one month several times a year, creating more work and expense. Plus, benefit deductions must be spread over 26 pay periods, rather than made on a standard monthly basis, so calculations are more complex.
The Bimonthly Payroll Calendar (Twice a Month)
Under the bimonthly pay schedule, employers pay employees twice a month, on two specific dates, such as the first and 15th of each month. Also called the semimonthly payroll calendar, it results in 24 pay cycles per year.
Like the biweekly payroll calendar, this pay schedule is predictable for employers and employees—a plus. It’s also more cost-effective (and less labor-intensive) for employers since there are fewer payroll cycles—24 versus 26 annually. And it simplifies monthly benefit deductions since deductions are made on a true bimonthly basis.
The tradeoff: the gap between pay periods varies, depending on the number of days in the month—and those longer pay intervals can hurt employees’ cash flow. In addition, employers need a Plan B for when paydays fall on weekends and holidays, and overtime hours can be trickier to calculate. According to the BLS, 19.8% of U.S. employers follow the bimonthly payroll calendar.
The Monthly Payroll Calendar (Once a Month)
Only 10.3% of employers follow a monthly payroll calendar—and for good reason. While employers enjoy lower payroll costs and reduced administration, it’s unpopular with employees (and is also outlawed in some states).
Waiting a whole month between paychecks can create a financial strain for workers and make them feel unappreciated. In addition, overtime may be more challenging to calculate accurately.
Realistically, paying employees 12 times a year may sound good on its face—but might hurt recruiting and retention efforts at a time when they really matter.
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Contact VensureHRChanging Your Payroll Calendar: Compliance Considerations
There are no federal requirements governing how frequently you pay your employees. However, many states do have such regulations—and it’s important to know what they are.
In addition, under the Federal Labor Standards Act (FLSA), employers can only change their payroll calendar under certain circumstances—specifically, when:
- There’s a legitimate business reason
- The change will be permanent
- The purpose is not to avoid paying overtime or minimum wage
- Wages will not be unreasonably delayed as a result
And of course, it’s important to factor in how your employees would respond to a change in their pay frequency—and to communicate clearly when making such a change.
At the end of the day, whatever 2023 payroll calendar you follow, it’s critical to get it right. If you’re not completely happy with your current payroll processing solution, VensureHR can help. Learn about our industry leading payroll software and services or request a call.
