Puzzling over pay dates in a leap year, or trying to settle on the best payroll schedule for your small business? This article breaks down the mechanics of pay periods and your legal obligations.
As we enter 2021, it is important to note that some employers will have 27 pay periods this year due to the extra Friday that falls on the payroll calendar. This is in contrast to the normal biweekly 26 pay periods we see during a typical year.
Pay practices, like all aspects of the employee experience, are an important part of your offer as an employer. How often you pay employees is much more than an administrative decision as it affects your ability to attract and retain great performers.
So, what's the ideal payroll schedule for small businesses, and how does that translate into pay periods? Let's break it down and look at some numbers to benchmark your pay practices.
Overview: What are pay periods?
Pay periods are recurring time periods for which employee wages are calculated and paid. The Fair Labor Standards Act (FLSA) requires businesses to pay employees on their "regular payday," but it doesn't specify how often those paydays must come.
Instead, states have set their own standards through payday frequency laws.
The most common pay periods are weekly, biweekly, semi-monthly, and monthly. No states allow bimonthly pay schedules. In most states, paying at least semi-monthly is acceptable, but some states have more stringent requirements.
In Connecticut, for example, businesses must pay weekly unless they get approval from the labor commission for longer pay periods. Be sure to verify your state's laws when setting up payroll.
How often you pay employees is an important decision not only because of its effect on recruiting and retention, but because you need to be able to deliver paychecks consistently based on the schedule you create.
Missing your regular payday, even by as little as a day or two, opens you up to FLSA complaints. The cost of a wage violation can be steep, including double back wages and other penalties.
There are also strategic considerations when setting pay frequency. Employees value shorter pay periods, yet each payroll run costs your business in administrative hours or vendor expense. You'll need to balance the administrative costs with your talent management goals to find the right frequency for your business.
How many pay periods are in a year?
With 52 work weeks in a year, pay periods generally add up as follows:
- Weekly: 52 pay periods per year
- Biweekly: 26 pay periods per year
- Semi-monthly: 24 pay periods per year
- Monthly: 12 pay periods per year
For weekly and biweekly pay, though, it's not quite that simple, because our 365-day year doesn't divide evenly into 7-day weeks. If you multiply 7 days times the 52 weeks in a year, you get 364 days. That means that each year, one day of the week occurs 53 times instead of 52.
If your payday falls on one of these "extra" days in the calendar year, you could have 53 weekly pay periods instead of 52, or 27 biweekly pay periods instead of 26. In addition to pay, this throws a wrench in things like payroll deductions for benefits.
In a leap year, you have two extra days to deal with. If you pay weekly or biweekly on one of those days, you’ll have an extra pay period that year.
You can tell where the extra days in a year will fall because they're the first (and last) days of the year. For example, 2019 started with a Tuesday, so there were 53 Tuesdays that year. 2016 began on a Friday, and since it was a leap year, there were 53 Fridays and Saturdays that year.
Payroll software can manage these quirks of the payroll process for you. The right software may put a wider range of payroll options and capabilities within reach, allowing you to align your pay practices more closely with your employees' desires.
4 types of pay periods
The four types of pay periods are weekly, biweekly, semi-monthly, and monthly. According to the U.S. Bureau of Labor Statistics (BLS), biweekly pay periods are most common among all employers, with 42% of employers paying on that schedule, followed by 34% paying weekly, 19% semi-monthly, and 5% monthly.
There are a few considerations when choosing your payroll schedule.
Type 1: Weekly
BLS reports that 36% of businesses with fewer than 10 employees pay on a weekly basis. Weekly pay periods are very common in the construction, manufacturing, mining, and transportation industries.
Weekly pay periods are particularly important to lower-wage employees who may lack a financial safety net for unexpected expenses. This frequency is the most costly and time-intensive payroll schedule, though.
Depending on the makeup of your workforce, your recruiting goals, and your bookkeeping practices, weekly pay periods may be worth the expense.
Type 2: Biweekly
Biweekly pay periods run a close second among small businesses at 32%. As business size increases, biweekly pay becomes the clear favorite, with 73% of very large companies paying on this schedule. Biweekly pay is also favored across the board in the education and health service industries.
Weekly pay, shown in blue, is the most common pay period for small businesses. Data from BLS. Image source: Author
Type 3: Semi-monthly
Semi-monthly pay periods run from the 1st of the month through the 15th, and from the 16th through the end of the month. This can be challenging to administer because your pay periods no longer coincide with the work week.
What do you do when a payday falls on a weekend? How can you calculate overtime based on a 40-hour work week?
Semi-monthly pay does, however, free you from the occasional extra paycheck dilemma.
Roughly 23% of small businesses pay semi-monthly, with its popularity declining as company size increases. Among those, salaried professions such as finance, information, and professional services are most likely to pay semi-monthly.
Type 4: Monthly
Roughly 10% of small businesses use a monthly pay period, the least common across all business groups. Monthly pay periods are the easiest and least expensive to administer, but they are also less popular with employees because they require careful planning and budgeting.
Once again, you'll have to weigh your talent management goals against your administrative capabilities to find the ideal schedule for your payroll processing.
FAQs
You may choose any day of the week as your payday. The only requirement is that your payday follows the pay period promptly.
You're not required to pay salaried employees more than their annual salary in years when you have extra pay periods. Some employers choose to reduce pay across all paychecks for the year to adjust for the extra payday.
(Video) Lunar Calendar to Cut your Hair in 2023: Best Days GuideThis can be hard to explain to employees, though. Other employers simply absorb the expense of the extra paychecks.
Once you choose a pay schedule, you may change it, but not frequently and not in a way that reduces your employees' pay. For example, adjusting a pay period to avoid paying overtime to someone would violate the FLSA.
Changing your company's pay schedule after several years for a legitimate business reason would be permissible, though.
The bottom line
The most important thing to remember when setting up your payroll process is that a payday, as far as the federal government is concerned, is a promise. It's also a bit of a high point in your employees’ work week. Making payday something your employees can bank on is a great way to say thanks for a job well done.
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FAQs
How many pay periods in a year 2023? ›
Employees receive 26 paychecks per year with a biweekly pay schedule. Depending on the calendar year, there are sometimes 27 pay periods, which can increase payroll costs.
What are the biweekly pay periods for 2023? ›In 2023, if you will be managing a traditional biweekly pay schedule, those who are paid biweekly will receive 26 paychecks. Employees will receive two paychecks in 10 of the 12 months and three in two of the months.
Which months in 2023 have 3 pay periods? ›If your first paycheck in 2023 is Friday, Jan. 6, your three-paycheck months will be March and September. If your first paycheck in 2023 is Friday, Jan. 13, your three-paycheck months will be June and December.
Why does 2023 have 27 pay periods? ›The 27th pay cycle -- for workers who get paid weekly or every two weeks -- happens because of what's called "payroll creep," when an extra day each year creeps into the calendar.
How many work days are in each month of 2023? ›In 2023, there are 20.75 average work days (or business days) per month for a standard five-day work week with 11 federal holidays off throughout the year.
How many fiscal weeks are there in 2023? ›There are 52 weeks in 2023. All weeks are starting on Monday and ending on Sunday. Please note that there are multiple systems for week numbering, this is the ISO week date standard (ISO-8601), other systems use weeks starting on Sunday (US) or Saturday (Islamic).
What is twice monthly pay schedule 2023? ›A semimonthly payment schedule is where you pay workers twice a month on specific pay dates—usually on the 1st and the 15th or on the 15th and the last day of the month. That means employees get 24 paychecks every year.
How many work hours in a year is 2023? ›In 2023, there are 260 working days, totaling 2,080 working hours.
What are the 5 week months in 2023? ›2023: March, June, September, December. 2024: March, May, August, November. 2025: January, May, August, October. 2026: January, May, July, October.
How many pay periods are in a year? ›Why Are There 26 Pay Periods in a Year? There are 26 pay periods in a year when your company runs payroll on a bi-weekly schedule. That is because there are 52 weeks in a year. If one period covers two weeks, 52 weeks divided by two weeks results in 26 two-week pay periods in a year.
How many months have 3 pay periods? ›
The months in which you take home three checks depends on your pay schedule. If your first paycheck in 2022 is scheduled for Friday, January 7, your three-paycheck months will be April and September. If your first paycheck in 2022 is Friday, January 14, your three-paycheck months are July and December.
Which years have 27 pay periods? ›The number of pay weeks in a year is normally fixed when it comes to biweekly or weekly paychecks. However, in some years, such as 2021, there are 27 biweekly pay periods. This is because January first was a Friday, resulting in a total of 53 Fridays in 2021.
What is the pay raise for 2023 for federal employees? ›Late last month, President Biden issued an executive order formalizing an average 4.6% pay increase for civilian federal workers in 2023. The raise is split between a 4.1% across-the-board increase in basic pay and a 0.5% boost to locality pay.
Are there 26 or 27 pay periods in 2022? ›In some years, a biweekly payroll frequency will result in 27 paychecks. However, in 2022, the number of biweekly paychecks will be 26.
Is it possible to have 27 pay periods in a year? ›These fraction of days start to add up, especially when a leap year arrives like in 2020. This creates a situation where every 11 years, employers who pay on a biweekly schedule will see 27 payrolls in a single year.
How many days left for 2023? ›The answer to the query How Many Days are Left in the year is provided here. We are approximately nearing the year 2023, and as of the current day, there are 170 days left until 2023.
How many working weeks in a year 2023? ›The workweek in 2023 is composed of 52 weeks, 260 work days, and 2096 working hours.
How many months is 23 working days? ›On the other end of the spectrum, we see March and August both have the maximum number of work days, clocking in at 23. It should also be noted that in 2021, the shortest work-day month was 19 days, and the longest work-day months were 22 days.
What is the fiscal year 2023? ›Each year, the Office of Management and Budget (OMB) prepares the President's proposed Federal Government budget for the upcoming Federal fiscal year, which runs from October 1 through September 30 of the following year.
Is 2023 a 53 week year? ›2006, 2012, 2017 and 2023 are all 53-week years.
What are the quarters in a year 2023? ›
The traditional calendar quarters that make up the year are:
Dates for Q1: January 1 – March 31. Dates for Q2: April 1 – June 3. Dates for Q3: July 1 – September 30. Dates for Q4: October 1 – December 31.
Number of paychecks per year
Employees who are paid semimonthly always receive two paychecks per month. Companies that run payroll with a biweekly frequency dole out a total of 26 paychecks per year. Companies that use semimonthly pay give employees 24 paychecks per year.
From the perspective of employee relations, the biweekly payroll is preferable, since employees become accustomed to being paid approximately twice each month, and then receive two extra "free" paychecks each year.
What months have 3 pay periods in 2024? ›If your first paycheck of 2024 is Friday, January 5, your three paycheck months are March and August. If your first paycheck of 2024 is Friday, January 12, your three paycheck months are May and November.
How many more weeks is 2023? ›What week of the year is it? It is currently week 6 in 2023. There are 46 weeks remaining.
How many hours is full time? ›Full Time in California
According to the California Department of Industrial Relations, working 40 hours per week qualifies employees as full-time workers.
One of the most auspicious days to start work in 2023 after CNY is January 25. This day is known as “Ji Chu,” and it is believed to be a perfect day for starting work, new projects, or making big decisions.
Which months have 5 pay periods? ›That means January will not be a five paycheck month for everyone. But the other months with five Fridays in 2021 are April, July, October and December.
How many months is 23 weeks & 5 days? ›If you are wondering how many months pregnant you are at 23 weeks, here's your answer: you are about six months pregnant!
Is 23 weeks 5 months or 6 months? ›How many months is 23 weeks pregnant? You're in your sixth month.
How do you calculate the number of pay periods? ›
With 52 work weeks in a year, pay periods generally add up as follows: Weekly: 52 pay periods per year. Biweekly: 26 pay periods per year. Semi-monthly: 24 pay periods per year.
How do you calculate pay periods? ›How do you calculate a pay period? Number of Pay Periods in the Year/Annual Salary = Gross Wages per Pay Period.
Why are there 24 pay periods in a year? ›Semi-monthly Pay- In a monthly pay period, employers need to pay their employees twice a month on a specific day. It is usually the 15th and the last day of the month. Since it works on a semi-monthly schedule, it results in 24 pay periods in a year.
What are the 4 types of pay periods? ›The four most common pay schedules include monthly, semi monthly, bi-weekly, and weekly. Occurs once a month on a specific recurring date.
How many pay periods in each month? ›Here are the four most common types of pay periods: Monthly: Occurs once a month on a specific recurring date. Semi-monthly: Occurs twice a month on two specific recurring dates. Bi-weekly: Occurs every two weeks on a specific day of the week.
What months have 3 pay periods in 2022? ›- If your first paycheck of 2022 is Friday, January 7, your three paycheck months are April and September.
- If your first paycheck of 2022 is Friday, January 14, your three paycheck months are July and December.
While the current federal leave year doesn't end until December 31 for most employees (a rare occurrence in which the leave year ends with the calendar year), the last date for scheduling “use or lose” annual leave is November 19.
Are there 26 or 27 pay periods in 2023? ›* Note: there are 27 pay periods in leave year 2023.
Can there be 27 pay periods in a year? ›These fraction of days start to add up, especially when a leap year arrives like in 2020. This creates a situation where every 11 years, employers who pay on a biweekly schedule will see 27 payrolls in a single year.
How many semi monthly pay periods in 2023? ›A semimonthly payment schedule is where you pay workers twice a month on specific pay dates—usually on the 1st and the 15th or on the 15th and the last day of the month. That means employees get 24 paychecks every year.
Why are there 26.1 pay periods? ›
Why Are There 26 Pay Periods in a Year? There are 26 pay periods in a year when your company runs payroll on a bi-weekly schedule. That is because there are 52 weeks in a year. If one period covers two weeks, 52 weeks divided by two weeks results in 26 two-week pay periods in a year.
What years have 27 pay days? ›The number of pay weeks in a year is normally fixed when it comes to biweekly or weekly paychecks. However, in some years, such as 2021, there are 27 biweekly pay periods. This is because January first was a Friday, resulting in a total of 53 Fridays in 2021.