Table of Contents
Table of Contents
What Is Biweekly Payroll?
When the company has a pay schedule with a payday every other week, this is biweekly payroll. This pay schedule is the most common pay period in the private sector according to the US Department of Labor, with an estimated 45.7% of private establishments utilizing this pay period for their organization.
Why Is Biweekly Payroll Helpful?
Before making the decision to switch to biweekly payroll for your organization from a monthly or semi-monthly pay schedule, consider why utilizing a biweekly payroll could be helpful.
- Convenience for employers. Biweekly payroll is the most common for a reason. It’s extremely convenient for employers to administer. It’s easy to follow the payroll schedule and payday always falls on the same day of the week every other week. It’s like clockwork, and most companies thrive on its convenience.
- Consistency for employees. Employees appreciate the consistency this pay schedule provides, knowing they get paid every other week. They don’t have to wait until the 15th and the end of the month as they would with a semi-monthly schedule, or put bills on hold as they would for a monthly payday. Biweekly provides employees a consistent income without the wait.
- More paydays annually. While employee pay won’t change, if they are salaried at 40,000 a year, they will receive that salary regardless of the pay schedule. However, with biweekly, some months may have three paychecks. This can be a major perk. Some employees see this as a bonus from your organization and appreciate feeling like they won the lottery once or twice a year with that extra paycheck.
What Are the Differences Between Biweekly Payroll and Semi-Monthly Payroll?
Biweekly and semi-monthly payroll may feel or look the same at first, but their differences are noticeable and could make a major difference as you evaluate them for your organization.
Annual Number of Paychecks
With a semi-monthly schedule, employees receive two paychecks per month, or 24 paydays per year, even on months with five weeks. If you go with the biweekly payroll, your employees will receive 26 paychecks a year, allowing for an extra paycheck in months with additional weeks.
Amounts Per Paycheck
As we have seen, while the annual salary stays the same, the paycheck amounts will be different between the two payroll schedules. If you have an employee earning $40,000 a year on a semi-monthly pay schedule, your formula would be: $40,000/24 = $1,666.67 per paycheck for gross wages. With a biweekly pay schedule, with more paydays, your formula will be: $40,000/26 = $1,528.46 gross per paycheck. With either pay schedule, these amounts total their annual salary, but the gross wages of their paychecks will look different.
The most drastic difference is the day of the week your employees are paid. With a semi-monthly pay schedule, most organizations select the 7th and 28th or the 1st and 15th for paydays, but the days of the week change month to month. Sometimes employees are paid on Tuesday and Friday and then Monday and Friday the following month. This can be challenging for payroll processing. With biweekly payroll, you select the day of the week employees are paid and adjust your pay schedule accordingly. For example, employees will be paid every other week on Friday, so you can seamlessly process payroll the same day every other week with no concerns.
How to Administer Biweekly Payroll
You may already understand the formula for calculating biweekly pay, but there’s more than just the pay to consider to appropriately administer this pay schedule. Let’s review the steps to ensure you’re on the right track.
Step 1: Ensure Pay Is Calculated Accurately
Whether you have hourly employees or salaried employees, you’ll want to calculate pay for biweekly accurately. For salaried employees, take their gross annual salary and divide it by 26 (the number of pay periods for the year). This is the amount to pay via payroll. Most payroll companies support you in this calculation, but there’s nothing wrong with double checking on your own to ensure accuracy. For your hourly employees, ensure that the pay schedule is correct and you’re paying them for the right number of days. Typically a biweekly pay schedule includes Sunday through the next Friday or something similar, so be sure the hours for your employees encompass all the days in the pay schedule, no more and no less.
Step 2: Decide on Benefit Calculations
There is always more to payroll than “paying the employees,” like deductions and benefit calculations. When utilizing a biweekly payroll, your organization can choose which of the following options is best for your company. Some deduct benefits like health insurance, 401(k) and any additional company benefits 24 times a year. This means during the months with 3 paychecks, one is without company benefit deductions. Other organizations prefer consistency and stick with deducting benefits 26 times. Be sure to check with your benefits administrators and ensure either option is applicable for your organization. If your plan does not permit you to use a 24 or 26 deduction schedule, make the decision accordingly.
Step 3: Double Check Everything
An added benefit of biweekly payroll is consistency when it comes to pay. If you’ve chosen a benefit deduction schedule that mirrors your pay schedule, then your salaried employee paychecks should remain pretty consistent week by week. If you have a majority of hourly employees or a consistent bonus schedule, these numbers will fluctuate each pay run. Either way, it’s important to double check the calculations to ensure they were done accurately. You don’t have to go into every employee’s paycheck to verify your payroll company has accurately calculated, but checking a handful of your salaried employees’ calculations can never hurt.
Which Industries Typically Use Biweekly Payroll?
The payroll schedule is individual for each organization, but let’s look at the types of companies that are more likely to use the biweekly pay schedule. According to the Department of Labor, there are two top industries as of February, 2022 that utilize biweekly payroll.
Education and Health Services
The industry of education and health services is large, and employees range drastically from entry-level part-time to your salaried doctors and teachers. Biweekly payroll reduces the time spent on payroll processing, explaining why this industry uses biweekly payroll.
Leisure and Hospitality
Coming in close behind education and health services is leisure and hospitality, with 65% of the industry using a biweekly pay schedule. This industry is all about providing services to their customers, so these organizations see biweekly payroll as a service to their employees. Providing them the consistency of the biweekly pay schedule allows employees to promote the same consistency of care for customers.
Questions You’ve Asked Us About Biweekly Payroll
How many hours is biweekly payroll?
Biweekly payroll is consistently 80 hours. Salaried employees typically work 2,080 hours per year and with a biweekly payroll, that’s broken down to 80 hours per pay period. It’s important to note, if you have hourly employees, their hours could be above this number if overtime is approved, or below this number based on your organization’s needs.
Are taxes affected by biweekly pay?
Taxes, in general, aren’t changed based on the duration of a pay period, but by the amount of pay. Employee deductions will trigger a calculation and percentage, and that percentage and calculation will not change no matter which pay schedule you choose. However, it’s important to remember that as you earn more, you could be subject to more taxes withheld depending on your tax bracket. For further tax questions, reach out to a tax professional to ensure your taxes are in line and accordance with your state and federal regulations.
Shalie has over 4 years of experience working in a variety of HR positions and organizations including: working as an HR department “of one”, working with a start-up based in Europe, to working in a fully established robust USA based HR department. Shalie has experience in multiple states and countries with all aspects of the HR spectrum. She has a passion to share her knowledge and experience to benefit the HR profession!