How often do you pay your employees, and how do you decide? When building the HR function in an organization, the question of when to pay employees is bound to come up. Read on to consider your options and determine the best pay date for your company.

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What Is a Pay Date?

A pay date is the designated day employees receive monetary payment for the work they completed during a period of time.

Different Pay Date Schedules

An employer has options as to how often they pay their employees.

Weekly

Weekly pay is a favorite among employees because they get paid more often. Nevertheless, this costs the employer more due to the time designated to process payroll.

Bi-weekly

On a bi-weekly schedule, employees are paid every two weeks, and it is easier to calculate overtime, exemptions, and bonuses.

Semi-monthly

Here, the company picks two days per month (i.e. the 15th and end of the month) to pay employees. Due to irregular pay periods, overtime and other calculations can be difficult.

Monthly

Employees are paid on the same date every month (i.e. the 1st or 15th). This is the cheapest option for employers but results in more difficult cash flow for employees and employers alike. The company has a large cash outflow to employees once a month, and employees wait a month for every paycheck.

How to Determine Pay Dates for Your Company

Consider four factors when determining the pay schedule that will be best for your company.

Local/State Regulations

Certain states have set parameters that must be met, including minimum lengths for pay periods and exemptions. (More on this below.)

Workforce Dynamics

What is the current headcount for hourly and salaried employees in your company?

  • Weekly or bi-weekly pay dates work well for a large hourly workforce. The similar pay-period lengths make it easier to calculate overtime and process payroll.
  • Salaried employees are paid consistently with little variation, making it easier to calculate, so semi-monthly and monthly pay dates are recommended for a workforce with mostly salaried employees.

Budget

Visit with your leadership and finance teams to determine the impact that pay dates will have on the organization. The goal is to maintain a good cash flow and not complicate company budgeting.

Processing Time

How much time can you dedicate to processing payroll? Paying employees weekly may become a massive undertaking. You may choose to outsource payroll functions or hire a dedicated payroll administrator if the budget is available for it, but reckon administrative time into your final decision.

Important Laws Regarding Pay Dates

Laws regarding pay dates provide foundational knowledge in what pay parameters exist in your state and federal standards for wage and labor.

Fair Labor Standards Act

This act requires all employers to pay employees at least the federal minimum wage for the first 40 hours worked on the designated pay date. Any additional hours worked should be paid one and a half times the regular rate of pay.

This act requires employers to keep records of employee time and pay records. In addition, it sets standards for tipped workers, child labor, and enforcement for violation.

State Laws

Some states have payday parameters to support employers in determining pay dates. Check out the Department of Labor to learn about your state.

Questions You’ve Asked Us About Pay Dates

The pay period is the length of time that an employee is paid for time worked. For example, in bi-weekly pay periods, each employee will be paid on the designated pay date for hours worked in the two previous weeks: the pay period. The pay date is when an employee receives the money through a check or direct deposit.
To determine the best for your organization, consider state and federal regulations, workforce dynamics, budget, and processing time.

Ryan is an HR Director with four years of experience and three masters degrees. One accomplishment he is proud of is the design and launch of a learning and development program for 800+ employees.

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