What Is A Pay Period? What Are Its Types?

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What Is A Pay Period? What Are Its Types?

Companies have different options when it comes to how they decide to pay their employees. A human resource officer is usually the one who is responsible for deciding which is the best option. This is a decision that affects the whole of the organization.

Deciding upon the correct pay time period is a crucial decision to run your business. Structuring the pay period in a well-thought-out way may help you comply with tax or labor laws and consistently meet the payroll obligations.

However, understanding the whole concept of the Wage timeframe is never easy. There are many factors that go under consideration while deciding the pay period for a company.

In this article, we will discuss a pay time period so that you may decide which would suit your business best.

Contents

What Is A Pay Period?

What Is A Pay Period

A pay period is the time structure that companies use to calculate the wage earnings and determine when the employees will receive their paychecks. A Wage timeframe remains constant and generally recurs on a weekly, semi-monthly, or monthly basis. Some may even operate on a bi-weekly basis.

However, it is necessary to remember that a pay time period is quite different compared to a workweek. The workweek is a mandate from the Fed, which is a fixed time period of 168 hours, or seven back-to-back 24-hour working periods.

The employer has to adopt this to be in compliance with the Fair Labor Standards Act. A work week may begin on any day on the calendar and at any given time during the day. The FLSA allows businesses to establish diverse workweeks for different employees or employee groups. The key purpose of a workweek is to make sure that every employee gets fair and correct pay for their work regardless of the pay time period type that the company follows.

Pay Period Vs. Pay Date 

The employee will not receive their paycheck at the end of the pay period. It happens a couple of days after the cycle ends, which is known as the pay date. The state governs all the requirements for the pay dates, not the FLSA. The total number of days an employee should get for the wages earned after the Wage timeframe ends depends from one state to the other.

For instance, the employees must be paid within six days after the Wage timeframe ends in Massachusetts. HR experts suggest having a minimum of five days between the end of the pay time period and the pay date.

This will allow a lot more time to create the payroll properly and accurately despite unforeseen events, vacations, and holidays and make sure that the timely and accurate reporting requirements are completed.

Types Of Pay Periods 

Types Of Pay Periods

Developing a pay period helps establish order and keeps businesses on track when there is a matter of tax withholdings for the IRS, calculating the total overtime for the non-exempt employees to maintain compliance with the regulation mandates.

Within the range of certain state laws, a business may pick a pay time period of its choice. It may include implementing different pay periods for multiple groups or categories of employees. Once the business decides which pay period they wish to follow, they must maintain it for the rest of the calendar year.

Weekly Pay Period 

In a weekly pay period, an organization pays its employees once each on the same day; like Friday, the employees get a total of 52 paychecks in a year. Multiple employees prefer this type of pay time period as they enjoy getting money for their efforts each week. Generally, organizations give more money or resources to this Wage timeframe type as they process the payroll weekly.

Biweekly Pay Period 

A biweekly pay period denotes that organizations pay their employees every alternate week on the very same day. Employees get a total of 26 paychecks in a year. However, because there are more than just 52 weeks in a month, employees may end up receiving 27 paychecks in some years. It is a popular pay period for employees as they get consistent paychecks that make it easy for them to budget for expenses.

Semi-Monthly Pay Period 

Companies that follow a semi-monthly Wage timeframe have their staff twice a month on the same day, like the 15th and 30th of each month. Employees receive a total of 24 paychecks in a year when companies follow this type of Wage timeframe. People generally like this option as they know they are receiving regular payments twice on the same date of every month. It is also comparatively easy to manage the benefit deductions with this type of pay period as the organization equally divides them between two paychecks monthly.

Monthly 

In a monthly pay period, organizations pay employees once every month on a recurring date, like the 30th or the last working day of each month. Employees here get 12 paychecks each year. It works the best for organizations as their paychecks remain consistent than hourly employees who might work different hour counts for each week.

Elements For A Pay Period 

Elements For A Pay Period

As I mentioned before, you cannot just decide upon a payroll without understanding how the organization works or its structure. The Wage timeframe remains constant for the entire calendar year; therefore, it should be a well-thought decision that would need no change later.

Here are some of the elements to consider while choosing the type of Wage timeframe for an organization.

Pay Regulations 

It is important that you consider the pay regulations while deciding a Wage timeframe to ensure you are complying with the laws of the state. Most states have a regulation on the frequency of the Wage timeframe by needing a minimum period that employers will have to pay their employees. This minimum depends from one state to the other.

Therefore, check with the state’s labor department if you are unsure of your location’s requirements.

Types Of Employees 

You must consider the types of workers you have within the organization while deciding the Wage timeframe, primarily if you pay regular overtime to your employees. Federal laws demand employers to calculate the overtime for each week, which is a lot more challenging when the pay periods are long.

Payroll Resources 

The payroll resources of a company include its budget or staff. This plays a larger part in deciding the Wage timeframe. While there are multiple advantages of frequent pay time periods, they may be more expensive if the company pays the staff more often.

Frequently Asked Questions!! (FAQs)

Q1. How many pay periods in a year?

Ans. There are a total of four in a year. They are:
Weekly
Biweekly
Semi-monthly
Monthly 

Q2. What are the methods?

Ans. There are four methods. They are monthly, semi-monthly, biweekly, and weekly.

Q3. How many days are there?

Ans. The number of days will depend upon the type of pay period one chooses. For weekly pay periods, the number of days will be 7. At the same time, monthly pay periods will have 30 days for each.

The Bottom Line

This is a fundamental part of any organization. It decides how the company will pay the employees who are putting in their hard work toward the growth of the organization.

There are four types, which must be decided keeping certain factors in mind. One cannot just randomly choose a pay time period that does not suit the structure of the company. Once a company chooses its pay structure, they have to keep it constant for the rest of the year. Therefore, not choosing a convenient Wage timeframe may land the company in trouble. So, take time, and choose a Wage timeframe that suits best your organization and its employees.

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