A biweekly payment structure is generally easier for the employee, as semi-monthly payroll periods make it trickier to predict payment day, as this will change monthly. This constant change in payment day means that payments may occur during a holiday, a Saturday, or even a Sunday. Should this be the case, most of the time, employees will automatically receive their payment on the last working day before the holiday or weekend. I have always been the proponent to take a monthly deduction amount and divide it by 2 as I pay biweekly.

If you lessen the amount of any of the paychecks you will need to ensure that you are meeting the minimum wage requirements. If you don’t communicate this properly, you could have angry and confused employees. Note that 2021 has an extra Friday, and New Year’s Day in 2021 falls on a Friday. If you push back your payday for New Year’s Day to Thursday, Dec. 31, 2020, your extra payday will happen in 2020. But if you don’t push it back, you will still have an extra payday — in 2021. You can get your paycheck schedule and details of your company’s plan for payment from your human resources department, Hass says.

Fridays: The 2021 Pay Period Leap Year

For example, if you pay semimonthly employees on the 15th and last day of each month, you will have to pay them on February 29 instead of February 28 during a leap year. If you choose the second option to pay out the extra paycheck, you will also want to inform your employees of your decision. When you inform your employees about the extra paycheck, you could see an increase in your employee’s morale.

• In any normal year, there will be six days of the week that occur 52 times and one day of the week that occurs 53 times.
• This extra payment primarily will impact salaried employees who will receive 27 paychecks/year instead of 26.
• Leap years have no effect on hourly paid employees or salaried employees who are paid semimonthly or monthly.
• Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
• For example, if an employee is paid on Wednesdays, the first
  payday of 2020 fell on Jan. 1, and the 26th pay date will fall
  on Dec. 16 — with an extra 27th paycheck due on Dec. 30.
• If your employee worked 12 days for the first pay period, and then 13 days for the next period, each paycheck would be for different amounts.
• Biweekly pay periods run a close second among small businesses at 32%.

Most of the information above was excerpted from a series of payroll handbooks published by The Division of Financial Operations of the New York City Department of Education. However, the overtime cap will not apply if the Fair Labor Standards Leap year! How to handle 27 biweekly payrolls in 2020 Act (FLSA) mandates payment for overtime worked or if your agency has been granted an overtime waiver by the Office of Labor Relations. The income boost could have tax implications, pushing people close to a higher tax bracket over the edge.

Move To a Semi-Monthly Pay Cycle

While the headaches an extra pay period can create aren’t exclusive to leap years, many employers run into an extra pay period during leap years, like this year’s. Option 2 in my post discussed an employer dividing a total annual salary by 53 (or 27) pay periods rather than 52 (or 26). This is an attractive option for employers because it is revenue neutral. If you have an employee who gets paid weekly and receives a salary, divide their annual salary by 53 to get their weekly gross pay. In a year with an additional payroll period, consider the effect on payroll deductions and special wage payments.

(If either of the first two days lands on a Thursday during a leap year, then you can also get 53 Thursdays). This means that for employers who pay employees weekly or bi-weekly, 2015 could be a Pay Period Leap Year! If your first weekly paychecks will issue on Thursday, January 1, 2015, you will have a fifty-third pay period on December 31, 2015. If your first bi-weekly paychecks will issue on Thursday, January 1, 2015, you will have a twenty-seventh pay period on December 31, 2015, depending on payday holiday processing rules. The Pay Period Leap Year is only an issue for salaried, exempt employees paid an annual salary divided over 26 or 52 pay periods. If you pay employees a piece rate, a weekly/bi-weekly rate, a daily rate/per diem, or by the hour, then the Pay Period Leap Year does not apply!

Who does this impact?

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. This guide to demystifying payroll periods will answer all of your pay frequency questions.

And they’re not every 11 or 12 years, when there are 27 biweekly pay periods. Employees paid weekly experience an extra pay period every five or six years. The 27th/53rd pay period phenomenon is real and can cause havoc if you’re not prepared.