One of the many decisions you’re responsible for as a business owner is how often to pay your employees. On the surface, pay frequency may not seem like such a big deal, but different options offer pros and cons for both your company and your workforce.
Here’s a rundown on pay frequencies:
A weekly pay schedule is most common for hourly wage earners. It offers employees the advantage of being paid more often and makes funding payroll easier for your company as you only need to cover one week’s worth at a time. But, it can be more work, because you need to run accurate, timely payroll every single week – 52 times a year.
This is the most common pay frequency, according to the U.S. Bureau of Labor Statistics. It’s typical for businesses that employ a combination of hourly and salaried workers. The advantage to your company is that you have to manage payroll only half as often as you would on a weekly timeframe. But it can be tricky for new hires, depending on their start date, because they may have to wait three weeks for their first check.
Bi-weekly versus semi-monthly:
On a bi-weekly schedule, you pay your employees on the same day of the week. On a semi-monthly schedule, you pay them on two specific dates each month, such as the 1st and the 15th. If that date falls on a holiday or weekend, it is typically moved to a business day, which can make tracking those dates a bit tricky for both employers and employees. Semi-monthly payroll is most often used for executives and exempt hourly workers.
A monthly pay schedule is less burdensome from an administrative standpoint but can be challenging for employees to plan and budget since they receive only one check per month.
Be mindful of legal requirements.
There is no federal law that dictates pay frequency, but some states do have specific requirements. The U.S. Department of Labor provides a complete list of these mandates.
Need Payroll Help? Key HR is here for you!
If you need further assistance and want to avoid costly compliance issues, outsourcing payroll may be the best strategic decision for your growing business. For additional insight and guidance, and to determine your best option, contact Key HR today.
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- On December 8, 2021
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