Determining Payroll Scheduling

Should You Set the Date or Does Your State?

Who determines when exactly payday will occur in a business? The answer varies. As a small business owner, should your business be using a specific payroll frequency/schedule? Should you opt for weekly, bi-weekly, semi-monthly or monthly paydays? It can be difficult to determine which you should use but in some cases, the state in which you run your business may make the choice for you. Here are some key points to keep in mind when setting up a payroll schedule.

Your State May Have Specific Payroll Scheduling Laws
The United States Department of Labor (DOL) website lists payroll requirements by state. If you work in Pennsylvania, there are no requirements and the employer has the option to choose which payroll frequency to use. However, if you live in California, the DOL requires that you pay weekly, bi-weekly or semi-monthly. Yet there may be specific occupational requirements for weekly and bi-weekly payment schedules, so you may need to do a little digging.

Understanding Payroll Options
Regardless of who chooses, it is helpful to have a better understanding of your payroll scheduling options.

Weekly: With this option, employees are paid once each week.Bi-weekly: Employees are paid every two weeks, totaling 26 paychecks each calendar year. Employees will typically receive two checks each month, although, during two months of the year, employees will each receive three checks.

Semi-monthly: This is a similar option in frequency to bi-weekly checks, except 24 paychecks will be issued each year rather than 26 as employees are always paid twice per month – regardless of the number of weeks in a year.

Monthly: It is as it sounds – employees are paid once per month. This is the least frequent option and is not ideal for many employees. Some states only allow monthly payroll for certain classifications of employees, like executives, supervisors and other special employee classifications.

There is not a single payroll schedule option that works best for everyone. You must take into account any state requirements, your type of business and number of employees to determine which type is best for you. If you are not sure, we can help.