Payroll frequency, also known as pay frequency, refers to how often employees receive their wages and how frequently employers must process payroll. Selecting the right pay schedule is essential and should align with your industry standards, company operations, and workforce preferences.
Why Payroll Frequency Matters
Establishing a clear payroll schedule offers multiple benefits: it keeps compensation consistent, helps employees manage their personal finances, ensures compliance with wage laws, and supports smoother financial planning for the business. A well-structured pay frequency also reduces confusion around payment timing for everyone involved.
Common Payroll Schedules to Know
There are several standard payroll frequencies used by businesses. Here’s a breakdown of the most common ones:
- Weekly: Employees are paid once per week, totaling 52 paychecks a year. According to the U.S. Bureau of Labor Statistics, roughly one-third of U.S. workers are paid weekly.
- Biweekly: Wages are issued every other week, resulting in 26 pay periods annually. Employees are typically paid on the same day of the week (e.g., every other Friday), and two months each year will include three paychecks instead of two.
- Semi-monthly: Employees are paid twice a month on set dates, like the 15th and the last day of the month, for a total of 24 paychecks per year. Note that payday may fall on different weekdays each time.
- Monthly: With this schedule, workers receive one paycheck per month, or 12 pay periods annually. This approach provides larger paychecks but may present budgeting challenges for some employees.
- Daily: The rarest and most costly method, daily pay is usually reserved for short-term or gig workers who are paid immediately after completing a day’s work.
What Should You Consider Before Choosing a Pay Schedule?
Selecting the right payroll frequency depends on several key factors:
- State laws: Each state has its own rules about how frequently workers must be paid. Some require at least semi-monthly payments, while a few states, like Alabama, Florida, and South Carolina, do not impose specific frequency laws.
- Workforce type: The number of employees, and whether they are hourly or salaried, can impact your decision. It’s possible to use different pay frequencies for different employee groups, but this can add complexity.
- Industry norms: Certain sectors have standard practices. For example, businesses in construction or hospitality often use a weekly payroll cycle to support hourly wage workers.
- Cash flow: Your company’s financial position may affect how frequently you can issue payroll. Startups with limited reserves may benefit from a monthly schedule, while larger organizations with steady cash flow might prefer more frequent payments.
- Payroll process: If you’re using a manual system, frequent payroll runs, like weekly or daily, can become burdensome. Tools like Beyond simplify payroll operations, making it easier to run payroll as often as your business needs.
Can You Adjust Your Payroll Frequency?
Yes, as the employer, you’re allowed to change your pay schedule. However, it’s important to weigh the potential impact before making adjustments. If you decide to move forward, notify your employees well in advance so they can plan ahead financially. Share the updated payroll calendar and explain when and why the changes are taking place to build trust and avoid confusion.
Selecting the right payroll frequency and managing it effectively with support from systems like Beyond, helps create a reliable, compliant, and transparent payroll experience for your team.