April 20, 2021: When you hire your first employees, you get to dive into all the aspects of running payroll. One of the first payroll decisions you may make is how often you run payroll (i.e., payroll frequency). (article sourced from the Woodard Report)
It might not be advised to choose a payroll frequency out of a hat. Instead, think about how often you should pay employees by considering the following five factors.
1. What are the options?
When it comes to choosing a pay frequency, you have options. Typical pay frequencies include:
- Weekly: 52 paychecks per year
- Biweekly: 26 paychecks per year
- Semimonthly: 24 paychecks per year
- Monthly: 12 paychecks per year
Under a weekly pay schedule, employees receive their wages once per week, on the same day of the week (e.g., Friday).
A biweekly schedule gives employees their pay every other week on the same day (e.g., Friday), generally resulting in two paychecks per month.
Semi-monthly frequencies result in employees receiving two paychecks a month but on specific dates (e.g., the 15th and 30th).
Last but not least, monthly payroll doles out one paycheck per month to employees.
In many cases, setting up a payroll calendar comes down to your preference, which we’ll get into in the next sections.
2. What’s popular?
According to the Bureau of Labor Statistics, biweekly is the most common pay frequency—42.2% of private employers use it. The next most popular is weekly with 33.8% of private businesses using it, followed by semimonthly (18.6%) and monthly (5.4%).
Keep in mind that a number of other factors could influence what’s popular, including:
- Employer size
- Employee types (e.g., hourly vs. salary)
For example, the most popular pay frequency among employers with one to nine employees is weekly, not biweekly.
3. What are the state laws?
Sometimes, choosing a pay frequency is about more than just personal preference—it’s also about compliance. There is not a federal payroll frequency law. However, almost all states have pay frequency laws.
Pay frequency laws by state require employers to pay their employees a certain number of times per month. In some cases, states require employers to pay employees every so many days (e.g., not more than 16 days apart in Arizona). You can pay employees more frequently than your state law requires, but not less.