By Laurie Nooren, SPHR, PHRca, SHRM-CP
Are your employees paid bi-weekly (every two weeks), semi-monthly (twice per month), or weekly (52 payrolls per year)? Of all these options, you may be thinking “who would want to run payroll 52 times in a year?” However, we find many employers pay their employees weekly.
As you know in California, wage and hour laws are very strict and penalties for wage and hour violations are assessed per pay period. If you are currently paying employees weekly, penalties may be assessed for each of the 52 weeks, per employee. By altering your weekly payroll to a bi-weekly (26 payrolls per year) or a semi-monthly (24 payrolls per year) payroll, you can reduce potential penalties by up to 50% or more.
Personally, we prefer the bi-weekly pay period. Employees are paid (for example) every other Friday, for the two-week period ending the previous Sunday. When using a bi-weekly pay period, paydays never fall on a weekend, and there are always the same number of hours per pay period (usually 80). If you pay semi-monthly, on the 15th of the month and the last day of the month, for example, paydays can sometimes fall on a weekend and pay dates will need to be adjusted accordingly. When using a semi-monthly pay period, there never seems to be the same number of hours each pay period. Additionally, in months with varying workdays, employees may receive different pay amounts, potentially impacting budget efforts.
Bi-weekly payrolls are also more convenient when having to calculate the regular rate of pay (RRP), since the RRP is generally based on the employer’s work week. If you are currently paying employees weekly, you may want to consider altering your pay dates going forward. If you are going to make a change, you should devise a plan so your employees are given advanced notice of the change from weekly to bi-weekly or semi-monthly payrolls.
Something to think about to help reduce potential liability should you have a wage and hour claim.
If you have questions regarding your payroll periods and want to think out loud about potentially changing them, please reach out to your HR Consultant.