How to Change Pay Periods
semi monthly payroll schedule

How to Change Pay Periods

Pay frequency is a sensitive issue that is important to both employees and management. Management needs to implement an efficient pay frequency that minimizes cost and abides by state laws, while employees need a payroll schedule with pay periods that they can rely on and that work with their monthly budget. Naturally, striking the right balance is a strategic decision.

The term “pay period” refers to the frequency with which an employer chooses to pay employees and contractors. Common pay periods include weekly, bi-weekly, semi-monthly, and monthly, with the most common frequencies being bi-weekly and semi-monthly.

Preferred pay periods vary from business to business, but are often mandated by state law. Currently, six states (Alabama, Montana, Nebraska, North Carolina, Pennsylvania, and South Carolina) do not mandate specific pay schedule requirements. Whatever your state requires, it is still important to weigh the advantages and disadvantages of each pay frequency option.

Common Pay Period Frequencies

Let’s break down the most common pay frequencies.

Payroll processed weekly results in 52 pay periods each year, and since most payroll providers charge per cycle, this is probably not the preferred choice for most companies. Employers also spend proportionally more time working on payroll in this scenario. This pay frequency is, however, one of the most attractive for employees, especially hourly employees. Many employees like weekly paychecks because it best meets their cash flow needs.

In this schedule, payroll processing occurs every two weeks, resulting in 26 pay periods per calendar year. Paychecks are calculated based on the last two weeks of work, with a full two weeks being 80 hours. Taxes are computed on a bi-weekly basis based on two weeks of pay. This frequency is preferred for companies with both salaried and hourly employees because it is easier to process both groups at the same time with this schedule.

This schedule typically processes payroll on the 1st and 15th of the month or the 15th and the last day of the month. Many companies choose this option because there are only 24 pay cycles rather than the 26 cycles on the bi-weekly schedule, so it can be less expensive for companies using a payroll provider who charges per payroll cycle. Check amounts in this schedule may vary because payroll may be processed on different days of the week, and pay periods have variable lengths because months have varying numbers of days. This pay frequency is typically used for salaried employees who receive a set amount of pay for each pay period. This frequency is not preferred for hourly employees because amounts are not fixed. To be considerate, many employers give employees a payroll calendar to help them keep track of their pay schedule.

Monthly pay cycles are the least expensive to administer; however, most employees don’t like this schedule. For many, it can be difficult or impossible to budget a full month ahead of time. So, it is relatively rare to see this pay frequency, especially for hourly employees.

How to Change Pay Periods

If your organization is thinking of changing from one payroll schedule to another, it is important to transition properly. Follow these six steps to change seamlessly to a new schedule.

# Create a team that will guide the change. Having one team in charge will increase ease of implementation and will decrease potential for mistakes during the process.
# Investigate the details. Charge one individual with the job of researching the legal ramifications surrounding the planned change in payroll frequency. Make sure your new schedule abides by state laws, and confer with your company’s lawyer to discuss contractual issues regarding the change.
# Save the date. Set a date for the change and make a timeline. It is especially helpful to make the change occur as close to the end of a fiscal year or the end of a quarter as possible to decrease record-keeping problems.
# Communicate with employees. Inform your people of the change sooner rather than later. Advance notice will allow workers to plan accordingly for the change. Communication is especially critical if you plan to decrease the frequency of pay as this will impact employees’ monthly budgets.
# Educate your employees about the change. Hold a question-and-answer session with your employees about the transition. A session like this will allow employees to feel heard and informed, and also helps prevent any confusion.
# Integrate planned changes into new contracts rather than rewriting all existing ones. Write the new pay schedule into contracts offered to new hires, gradually phasing out the old pay frequency and converting to your new schedule over time.

Pay frequency is an important strategic decision for management because of its effect on legal compliance and costs, as well as its impact on employees. No matter which pay schedule you choose, Paycor’s solutions streamline payroll processes, saving you valuable time and allowing you to spend more time on strategic decision-making.

Learn more about our payroll, HR and time & attendance solutions by getting in touch with a Paycor representative.

Sources:, ArticlesBase

Subscribe to Our Resource Center Digest

Enter your email below to receive a weekly recap of the latest articles from Paycor's Resource Center.

Check your inbox for an email confirming your subscription. Enjoy!

More to Discover

Webinar: October Web Summit - The Data you Need to Know to Win Over the CFO

Webinar: October Web Summit - The Data you Need to Know to Win Over the CFO

Paycor reviewed proprietary data from nearly 30,000 customers and found that many standard HR and recruiting metrics are tactical, in that they track project management, or, at most, basic dollar-in, dollar-out cost analysis. The most successful HR teams map people management metrics to business outcomes. And that gets the C-suite to pay attention.Paycor’s Tim Ruge will analyze the critical HR metrics that matter to the C-suite, so they can see HR in a brand new light. Plus, he’ll provide some tips to start benchmarking and implementing these metrics.Speaker: Tim RugeTim Ruge is Paycor’s Director of Product Marketing, focusing on the HR Center of Excellence and various compliance topics. Since joining Paycor in 2012, Tim has helped...

Webinar: October Web Summit - Wage and Hour Basics: Past, Present and Future

Webinar: October Web Summit - Wage and Hour Basics: Past, Present and Future

Do you know Wage and Hour? If you need a primer or a just a refresher, this session is designed to give you an overview of the Department of Labor’s Wage and Hour Division—what it does, and what you as an employer need to do to keep on top of important issues. During this session we’ll learn more about some of the nation’s most comprehensive federal labor laws including minimum wage, overtime pay, recordkeeping, child labor, family and medical leave, and much more!Speaker: Amy LetkeAmy is the founder of Integrity HR, Inc. Amy provides workplace solutions to improve performance, reduce liability and increase profits. She is passionate about helping other entrepreneurs and business owners achieve success.

Why (and How) to Switch to a New HR & Payroll Platform

Why (and How) to Switch to a New HR & Payroll Platform

The right HR technology can enable you to better manage, develop and engage people and make better strategic decisions. However, the opposite is also true. Sticking with the wrong HR & Payroll provider can tank an otherwise healthy business.The consequences of NOT switching, and staying with a subpar HR & Payroll provider, touch every aspect of your organization. Obviously, HR and the payroll process are affected, but the inefficiencies can also impact recruiting, training and development, time & attendance and how you go about analyzing the data overall.So why don’t more organizations make the switch to a platform that better meets their needs?For starters, it can be a challenge to figure out how they differentiate. Not all...


The Different Types of Turnover

The Different Types of Turnover

Voluntary vs. Involuntary Turnover Regardless of business type there are two main types of employee turnover: voluntary and involuntary. Within each of those categories, however, you’ll find various reasons for why a company might have employee turnover. While the term “turnover” sometimes has a negative connotation, not all turnover is bad. For example, when a poorly performing employee is let go and replaced with someone who is motivated and excels at their job, productivity can soar. This new worker can bring bottom-line benefits, as well as provide an overall boost to team morale. What is involuntary turnover? Involuntary turnover includes layoffs or reductions in force and terminating poorly performing employees. The first type of...