Depending on your business needs, you may decide to have different pay periods for different types of employees. For instance, you may decide that hourly employees get paid every week, and salaried employees get paid twice a month. Because offering different pay periods can get confusing, it may be in your best interest to outsource payroll to experts trained to handle flexible paychecks. Here’s why.
Typical Pay Periods
Usual options for paying employees are weekly, bi-weekly, semi-monthly, and monthly. Employees may be paid the same day of the week for the previous week, every other week for either the previous two weeks or the two weeks before that, twice a month, or the last day of the month or the first day of the month for the previous month. Depending on the pay period, employees may receive 52, 26, 24 or 12 paychecks a year. Although you may change the frequency of paychecks, it cannot be arbitrary or often. You must have a legitimate reason, such as accounting software requirements or cost, and cannot unreasonably delay payment.
Varying Employee Pay Periods
You may pay salaried and hourly employees in different ways and at different times. For instance, since salaried employees do not receive overtime, they may be paid the same amount on a monthly or semi-monthly basis. Also, your industry may affect your pay frequencies. For example, although most construction workers are paid weekly, most education and health services employees are paid bi-weekly or semi-monthly. Plus, your number of employees may affect your pay frequencies. For example, whereas most companies with 1,000 or more employees use a bi-weekly pay frequency, most businesses with fewer than ten employees have a different pay frequency. Additionally, the type of workers you have may impact how frequently they get paid. For example, although hourly workers tend to be paid weekly, salaried workers typically get paid bi-weekly, bi-monthly or monthly.
Different Pay Period Costs
Keep in mind that paying more frequently increases payroll costs. Check printing, direct deposit costs charged by banks, and the time an employee spends calculating gross pay, deductions and net pay all add up. For example, processing paychecks every other week, or 26 times a year, costs more than bi-monthly, or 24 times a year.
Compliance with Laws
Always comply with federal and state laws regarding paychecks. For instance, you must pay employees at regular intervals, not monthly one month and weekly the next month. Also, some states, such as Minnesota, require you to pay employees at least every 15 days. Arizona and Maine are among the states that require payment every 16 days. Plus, some states require you to pay terminated employees within a set period.