
How to Change Pay Periods
How often you pay your employees can be just as important as how much. Pay frequency is a sensitive issue for both employees and management. All companies need to find a pay frequency that works for them, which minimizes expense and abides by state law. Employees will rely on the payroll schedule you choose and build their monthly budget around it, so striking the right balance is key.
Changing your pay periods is not a decision to be taken lightly. If you’re sure it’s necessary, the least you can do is be fully informed about all the implications.
How Often Should You Pay Employees?
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.
- Weekly
- Bi-Weekly
- Semi-Monthly/Bi-Monthly
- Monthly
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.
- Do your legal homework.
- Save the date.
- Communicate with employees.
- Educate your employees about the change.
- Review contracts.
Having one team in charge will increase ease of implementation and will decrease potential
for mistakes during the process.
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.
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.
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.
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 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.
Ready to take the next step?
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.

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