Some businesses pay employees using different pay periods, depending on whether they are hourly vs. When an employee’s position changes, you may need to change their pay frequency, too. Sometimes, changing payroll frequency doesn’t affect all employees. If the inconsistency causes you to be confused and disorganized, you may consider changing pay periods. Inconsistent paydays can be challenging to keep track of for some small business owners. Because the 15th and the last day of the month aren’t consistently on a Friday, paydays can be anytime during the week. For example, you might run payroll on the 15th and the last day of the month. When you use a semimonthly schedule, you pay employees on specific dates, but the days vary. Semimonthly paydays don’t take place on the same day of the week. For consistencyĪ semimonthly payroll frequency can be more confusing than others. For example, weekly, semimonthly, and monthly payrolls always have the same number of payrolls per month, making it easier to budget for some employers.
If you have difficulty handling the months with the third paycheck, you may consider changing your payroll cycle to a more financially consistent method. Not being prepared for the third paycheck during those months can throw off your budget and create problems for your business. However, there are two, three-paycheck months per year. Under a biweekly frequency, you pay employees twice per month. Sometimes, the payroll method you choose messes up your cash flow projections-like if you run payroll using a biweekly frequency and forget about those three-paycheck months. Here are some reasons why you might decide to change your small business’s pay frequency. If you pick a pay frequency that doesn’t work for your enterprise, you may want to change it up. Sometimes, you make the wrong choice for your company. When you’re running a business, you regularly have to make decisions. Choosing a payroll frequency impacts how many times you run payroll and distribute wages. When you have employees, you need to determine how often to pay them.
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And that is why knowing how to change pay frequency legally is so important. Had the employer randomly made changes, the case might not have gone so well for them. Why? Because the employer followed changing payroll frequency guidelines. But, the court ruled in favor of the business (and upheld the decision despite numerous appeals). A business changed its pay frequency … and the employees sued. Just look at the court case, Wilkinson v. Making this kind of change could do more than ruffle your employees’ feathers-it could land you in hot legal water. Tired of how often you run payroll and pay employees? Before changing payroll frequency, there are a number of things to consider.
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