A pay period is the recurring period of time during which employees work and are paid. These periods are fixed and most often occur on a biweekly or semimonthly basis, though some state laws require a specific frequency. Certain industries also follow calendar norms, such as weekly payroll for hourly employees in manufacturing companies.
Payroll affects your business’s cash flow, tax timing, and financial reporting requirements. That’s why choosing the right pay period matters more than it might look at first glance. This guide walks you through how different schedules work and what to think about before settling on one.
I also included free downloadable pay period calendars that line up with the most common pay cycles. Note that the payout out day for these calendars is every Friday. If you pay employees on a different day, you may have to follow different pay frequencies.
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How pay periods work
Employers set a regular pay period to ensure their employees receive consistent paychecks. While most companies base their pay schedule on the needs of the business, there are federal and state labor laws in place that govern the minimum consistency with which these schedules must comply.
Employers consider the minimum frequency at which they can legally process payroll, often monthly, to set a regular pay schedule. Remember, every pay schedule includes start and end dates for time worked and a payday on which employees receive their paychecks. The payday varies depending on the employer; some designate the payday to be the last date of every pay period, while others may opt to pay a week after the pay period ends.
If you’re wondering why payday often lands after the pay period closes, this example of a basic cutoff timeline shows the logic:
- Pay period ends:Â Saturday (January 17)
- Timecards due:Â Monday (January 19)
- Payroll processed:Â Tuesday to Wednesday
- Payday:Â Friday (January 23)
Paying a few days after the period ends gives you time to confirm hours, tips, commissions, and last-minute changes before you lock payroll.
Types of pay periods
Here are a few pay period examples and some of the most common pay schedules from which you can choose. Keep in mind that certain industries have norms, and you may need to follow your industry’s tradition to remain a competitive employer.
I recommend using a pay period calendar and/or chart to help you.
- A pay period calendar makes it easy to see each pay date because they’re highlighted. Post the calendar on your desk or wall for easy reference and write additional information or reminders to help you keep track of other important dates. Just follow along each day, and you’ll always know when payday is approaching. This really comes in handy if you process payroll manually.
- Use a pay period chart when calculating your employees’ work hours. The chart lists the beginning and end dates you need to consider for each payroll, so you can easily ensure you’re only paying for time worked in the appropriate period. It’s a good idea to require your hourly employees to submit timesheets based on your set pay schedule.
1. Monthly
With a monthly pay schedule, payroll is processed once a month. It’s not as common as the others and results in only 12 pay dates in the year. Some companies pay employees on the last Friday of each month, while others opt to pay on the last day of the month. If that happens to be on the weekend, they may pay on the last weekday before it. While it simplifies payroll administration, monthly periods require employees to exercise careful budgeting to manage their expenses between payments.
Monthly payroll simplifies administration, but employees have to budget carefully between checks. It’s also restricted in some states, like California, New York, and Massachusetts, so review your state’s labor laws before committing to this schedule.
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2. Semimonthly
Semimonthly, which is sometimes confused with biweekly, means twice a month. Many companies opt to pay on the 15th and last day of every month. If either of those days falls on a weekend, payroll is processed on the closest weekday before it. The pay period can include 14 to 16 days, depending on the number of days in the month.
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While this pay schedule simplifies accounting, it can complicate calculations when periods split work weeks. Here are several practical solutions for handling split workweeks in semimonthly pay periods:
- Time estimation system: Managers to estimate hours for split week’s days using schedules and historical patterns as their guide. Any differences between estimated and actual hours are reconciled and adjusted in the following pay period.
- Rolling cutoff method:Â This method establishes a timecard submission cutoff two to three days before the period ends. Remaining days automatically roll into the next period, creating a consistent lag in the payroll cycle while maintaining payment accuracy.
- Hybrid payment schedule:Â Fixed salary components are processed on a semimonthly basis, providing predictable earnings disbursement to employees. Variable pay, such as overtime, runs on a delayed schedule, allowing time for proper calculation and verification of additional earnings.
- Payroll software solutions:Â Some payroll systems can automate split-week calculations and carry-forward adjustments, which reduces manual inputs and potential calculation errors.
3. Biweekly
Biweekly means payroll is run once every two weeks or every other week, wherein employees are paid for two workweeks. For most months, this equates to two paydays, but three months in the year (that vary from year to year) have three biweekly paydays. The workweek for this pay period typically starts on a Sunday and ends on a Saturday.
This is also the most common pay schedule overall, with more than a third of US private businesses historically paying their employees every two weeks. Many businesses in education, healthcare, leisure and hospitality, and information technology industries follow it.
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Important note: Depending on when a company first ran biweekly payroll, some employers will have 27 biweekly pay dates in a calendar year instead of the usual 26. If this happens, note that employees aren’t earning more overall. Annual pay is simply spread across one more check, so salary budgeting, deductions, and cashflow forecasts may need to be adjusted.
4. Weekly
Weekly payroll means employees are paid once a week. Each paycheck covers one workweek, such as Sunday through Saturday. Many companies choose Friday as their payday since it’s the last weekday, but it can be any day of the week. Many businesses in the construction, manufacturing, restaurant, and mining industries pay on this cycle.
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5. Fixed-length
In a fixed-length pay period, employees are paid based on the number of days per pay period instead of a calendar date. The number of days could vary in this pay period; thus, the number of checks an employee receives every year may also vary. This type of pay period is common in industries where hourly or salaried employees follow unique schedules.
The education sector is a good example. Staff members and school teachers don’t typically work in the summer. Instead of receiving biweekly payroll throughout the calendar year, they only get their salaries during the 10 months they work or have their annual salary distributed over 21 paychecks. Note that some states have rules around this type of pay period, so check state regulations to ensure compliance.
6. Custom
A custom pay period allows employers to set a unique pay schedule that best suits their business needs. This could involve paying employees on specific dates each month, such as the 1st and 15th, or on a less conventional schedule tailored to the company’s workflow. Even with a custom schedule, you still need to follow state payday frequency rules and calculate overtime using your defined FLSA workweek.
How to choose the right pay period
A year can be divided into 52 weeks, 365 days, or 12 months, which means there are numerous schedules you can use for your payroll. Some businesses are more concerned with weekly payouts and opt to pay once a week or every other week. Others divide each month in half and choose to pay in the middle and at the end. Additionally, although not as frequent, a monthly pay schedule works better for some companies.
Here are some factors to consider:
- Consider your workforce composition:Â Analyze employee demographics and the types of workers you have. Hourly or restaurant employees (who earned tipped minimum wage) often prefer weekly or biweekly pay periods for more frequent access to their earnings, while salaried employees might be comfortable with semimonthly payouts. Forcing employees who receive low wages to wait two to three weeks for payday could damage morale.
- Account for state requirements:Â Some states mandate minimum pay frequencies or maximum intervals between work performed and payment received. Ensure compliance with federal, state, and local labor laws regarding pay frequency, minimum wage, overtime, and payroll tax regulations.
- Evaluate your cash flow:Â Paying weekly means you must have enough cash available to pay more often. Some businesses have cash flow cycles that require more time before bank accounts are replenished, like stores that sell merchandise on credit.
- Check your profitability:Â Running payroll more often usually costs more money (around $50 to $100 per pay run for 10 employees). Some providers, like Gusto, offset that with plans that allow unlimited runs, so total cost depends on your setup.
State payroll guides
Before choosing your pay schedule, it’s important to know how often your state requires employers to process payroll, which we detail in our state payroll guides. You also need to check each state’s requirements for pay periods. Click on the map below to see the guide for your respective state:
State Payroll Directory
Paying in arrears vs current
When you pay on a current schedule, you pay employees as soon as or before their pay cycle ends. Paying in arrears means there’s a delay between the time employees work and when they receive pay for that work. This delay could be a week or more, depending on state laws.
Here’s an example of paying employees in arrears.
Jeff sets his pay period as Sunday through Saturday but opts to pay on Friday the following week (six days after the last workday). While this is sometimes a nuisance to new employees who may have to work a week “in the hole,” meaning they’re not paid at the end of their first week, it can be beneficial for some employers.
Paying employees for time that hasn’t happened yet could lead to adjustments later if schedules change. This can become cumbersome, as you’ll have to keep track of pay cycles for which you’ve already processed payroll. It becomes even trickier when overtime applies, since federal law still requires paying time and a half (1.5 times regular hourly pay) for hours worked over 40 in a workweek.
Determining whether to pay in arrears or current
There is no hard rule guiding whether you should pay in arrears or current. You should consider the needs of your business and your employees. Paying in arrears gives you time to gather all timesheets, tip reports, and other information to ensure you process payroll correctly; there’s no need to forecast employee schedules.
Paying current is less confusing for some employees and works well in certain instances. For example, if a company’s pay cycle runs Sunday through Saturday with a payday on Friday, the process involves less uncertainty if employees only work on weekdays. Even though Saturday is part of the pay cycle, employees are not working that day. This method is also suitable for salaried employees who receive a fixed amount each pay period, regardless of the hours they work.
Frequently asked questions (FAQs) about pay periods
A pay period refers to the timeframe over which an employee’s work hours are recorded, typically weekly, biweekly, or monthly. A pay date is the specific day employees receive their wages for that period.
These are months where biweekly paid employees receive three paychecks instead of two. If they get paid every two weeks, they’ll have 26 pay periods in one year because there are 52 weeks in a year (52 ÷ 2 = 26). When months don’t line up evenly with a 14-day cycle, then two or three months each year will include a third payday. Which months those are depends on your first payday.
Yes, but it must comply with federal, state, and labor laws governing pay frequency. Employers typically need to give employees notice ahead of time, and make sure the change doesn’t cause wage loss.
No. Overtime is calculated based on your defined FLSA workweek, not your pay period length. Even if you pay biweekly or semimonthly, you still look at each 168-hour workweek on its own to determine whether someone worked more than 40 hours and is owed time and a half. This is especially important when a workweek crosses two pay periods.
Yes, it can. Many employers take benefit premiums and other deductions per paycheck, so the number of paychecks in a year changes the timing of those deductions. For example, in a 27-pay-period biweekly year, you may need to spread annual benefit costs across 27 checks instead of 26 so you do not over-deduct. PTO accruals can work the same way if you award time per pay period.
