Why Employees Love Getting Paid Biweekly

For example, industries like construction and manufacturing typically use a weekly frequency of pay. Because the payroll is processed fewer times for semimonthly frequencies than biweekly, employees’ paychecks will be greater. Biweekly paychecks will be be for less money, but employees will receive the two additional paychecks to make up the difference. In semi-monthly frequencies, payroll is processed fewer times than biweekly, so employees’ paychecks are larger. Furthermore, biweekly paychecks are smaller, but employees will receive two extra paychecks to make up the difference.

According to the Bureau of Labor Statistics, 36.5% of employees are paid biweekly. On the other hand, only 19.8% of employees are paid using the semimonthly payroll frequency. Full-time salaried employees are typically paid for 2,080 work hours yearly, and this must be delivered to employees regardless of the pay frequency. The difference is that full-time biweekly salaried employees will be paid for 80 hours each payday. Full-time semi-monthly employees will receive 86.67 hours of pay per paycheck. In a biweekly pay period or schedule, the employee is set to receive a paycheck every other week.

Monthly pay period (12 paychecks per year)

To address this, the University administration has approved a one-time bridge payment on August 12th for employees affected by this payroll change. July 29, 2022 will be the last semi-monthly pay for non-exempt staff. In August 2022, affected employees will receive law firm bookkeeping their first bi-weekly pay which will reflect a smaller amount, because they will be paid more frequently. The Frequently Asked Questions below provide important information about when affected employees can expect to be paid as well as benefits and withholdings.

This change will result in a clearly defined two-week work period that includes both regular and exception pay. Employees and students who are paid semi-monthly will move to a bi-weekly payroll. Paired with Time Tracking, this add-on turns your account into the end-to-end solution to paying your employees accurately and on time—every time. At the end of a year, regardless of which payment frequency you use, the employee will receive the same amount of money and owe the same amount of taxes.

Understanding Global Labor Arbitrage: Definition, Pros & Cons

The number of days in the last half of the month will usually either be 15 or 16. As you can see, accurate record keeping is a crucial step for employers who use a semi-monthly pay frequency for their non-exempt employees. We recommend employers use an electronic time and attendance tracking system in order to properly record https://www.digitalconnectmag.com/a-deep-dive-into-law-firm-bookkeeping/ and pay overtime. The big difference here is that bi-weekly payments are made 26 times per year which is the same as one extra monthly payment, or 2 extra semi-monthly payments per year. The extra payments are applied directly against your principal thereby saving you interest and shortening the amortization of your mortgage.

• Hopefully, by understanding each option, you can choose the right payment schedule for your small business.
• If a payday falls on a federal holiday, or weekend, the payday will need to be pushed up.
• To learn how technology can make processing payroll easy at any frequency, schedule a demo today.
• In August 2022, affected employees will receive their first bi-weekly pay which will reflect a smaller amount, because they will be paid more frequently.
• Understanding the difference between biweekly vs. semimonthly payroll can prevent financial setbacks, keep your business legally compliant, and more.
• If your employees punch in and out and work a different amount of hours each week, then a bi-weekly payroll will make more sense.
• There will always be a couple of months where you will have three paydays instead of two.

Because semi-monthly and bi-weekly payroll are two of the most popular payroll frequencies, choosing between them will be difficult. Take a look at the differences, pros, cons, and statistics between the two to help narrow down your choice. When it comes to semi-monthly vs. biweekly, there is literally no difference in the amount per year your employees will be paid. An employee who gets $51,000 per year will receive the same annual salary regardless of whether they are being paid semi-monthly vs. bi-weekly. It all depends on what makes the most sense for your unique business restrictions. If you are paid semi-monthly, you will be paid $1,750 per paycheck before taxes (your salary divided by 24 checks per year).

How to Calculate Effective Hourly Payroll

That means that in a semimonthly pay schedule, you get paid 24 times a year, and with a biweekly schedule, there are 26 pay periods. One point of consideration is how many employees you have and if those employees are paid hourly or salaried. Running a semimonthly payroll for hourly employees is more difficult and confusing than doing so for salaried employees, especially when workers earn overtime pay. When employees are paid semimonthly, salaried workers receive the same amount to employees each month. The extra two paychecks for biweekly pay frequencies can make budgeting more challenging if the business doesn’t properly prepare for months with three paychecks.

• We write only in-depth, original content with an intention to help business owners grow.
• However, they may not necessarily fall on the same day of the week, and you would end up paying your employees 24 times in a year instead of 26.
• If you’re running payroll yourself, you’ll want to consider if you can run payroll weekly, biweekly, semimonthly, or monthly.
• Employees who are paid semi-monthly have higher paychecks than those who are paid every other week since companies who use semi-monthly frequency run payroll less.
• Because of the set dates, payday can happen on any day of the week.
• Paired with Time Tracking, this add-on turns your account into the end-to-end solution to paying your employees accurately and on time—every time.

The payroll processing differs in that the full-time bi-weekly paid employees are compensated for 80 hours on each pay date. On the other hand, the semi-monthly approach compensates the employees for 86.67 hours on every pay date. The employer arrives at the hours for the bi-weekly approach by dividing 2,080 hours by 26 days. For the employer to arrive at the hours on a semi-monthly approach they divide 2080 hours by 24 days. A bi-weekly payroll schedule may work better for some businesses than others. It is also possible for employers to change their payday to a different day or change how often they pay their employees.

Biweekly vs. Semimonthly

She has been writing about personal finance and budgeting since 2008. She taught Accounting, Management, Marketing and Business Law at WV Business College and Belmont College and holds a BA and an MAED in Education and Training. Pay frequency is a critical decision that impacts everything from job satisfaction to business finances to the level of administrative support you need.

• With a biweekly pay schedule, there are two months in the year where employees receive three paychecks.
• The terms ‘bi-weekly’ and ‘semi-monthly’ are often mistaken for one another, so let’s break down the differences.
• Make sure your business gets the most out of payroll performance and stay compliant by keeping track of your payroll performance.
• If you want to pay out less each pay period even though you’ll have two additional pay periods during the year, the bi-weekly option could be the right choice.
• If you have 10 employees who each earn $1,500 in gross wages per paycheck, you’ll need to have an additional $15,000 on hand both months that have three paychecks in them.
• When overtime and specific hours need to be determined weekly, it can be challenging to adapt to a semi-monthly pay schedule.

Deductions with flat rate premiums include benefits where you pay a set amount each month. There will be no change to these flat rate monthly premiums because the total number of deductions in the payroll is 24 per year, meaning two per month. Because there are 26 pay periods in a year, you will end up with two “benefit holidays” — two payrolls where your flat rate deductions are not withheld. The schedule when employees receive their paychecks and when you run payroll is also one of the differences between the two pay frequencies. Weekly payroll works best for hourly workers and employees with irregular schedules.

You may be missing out on a 66.5% salary hike*

State law will typically specify the time frame within which employees must legally get paid. That doesn’t mean, however, that you can’t pay your employees more frequently; the time frame that State law specifies serves as a minimum. While taking care of their interests, they also need to give due consideration to the state regulations. In many states, there are regulations about how often the employees need to be paid. Thus, it is important to check the frequencies of payment in different states before arriving at the final decision.