What is a pay date?

A pay date is the day your employees receive payments for the work they completed over the designated pay period. Pay dates can be set to a specific numbered day of the month or can be specified intervals such as every week or every two weeks. Depending on the size and complexity of your organization, processing payroll may mean more than just clicking some buttons in your payroll software. It’s important to consider the needs of your employees and the workload associated with running the payroll.

What pay date schedules can you use?

Some standard pay schedules include the following.

Weekly payments

Many employees prefer to be paid weekly because it makes it easier for them to budget. However, from an employer’s point of view, issuing weekly payments can be more costly because it requires a greater investment in time from the payroll department. If you’re outsourcing payroll, you may find this cycle costs more to run because of the extra workload for the payroll company.

Biweekly payments

This schedule means paying the employees every two weeks. A biweekly schedule is a good compromise in that it still gives employees a steady flow of income and makes it easier for the payroll department to calculate overtime, bonuses and taxes.

Semi-monthly payments

With semi-monthly payments, the employer picks two salary payment dates per month. For example, an employee may be paid on the 1st of the month and the 15th of the month. At first glance, this may look a lot like biweekly payments, but because of the varying lengths of each month throughout the year it isn’t the same thing. Some pay periods are longer than others, and this can make calculating overtime more challenging.

Four-weekly payments

Four-weekly payment periods mean an employee gets paid 13 times per year, with each payment being equal. This can make it easier to calculate taxes and overtime. However, it can be confusing for employees who have to work out which day of the month their pay will arrive. In addition, some employees may struggle to manage their cash flow with such a large gap between payments.

Monthly payments

Monthly payments are made on the same salary payment date each month. This is a popular option for employers because it makes cash flow more predictable for them and cuts down the time required to process payroll. However, it can cause issues because employers end up with large outgoings each month. It also creates challenges for employees, especially as some months are longer than others, making it hard for them to budget.

What to consider when calculating pay dates

There are several factors to consider when determining payment schedules for your organization:

• Local or state regulations: Some states have rules about pay periods or recommendations to help employers choose fair payment periods.

• Budget limitations: Try to work with your finance team to select payment periods that will not hamper your organization’s cash flow.

• Processing times: Consider how long it takes to process payroll. If you have a large team, processing pay monthly or bimonthly may make more sense than running a weekly payroll.

• Your workforce: It’s easier to process monthly payroll for salaried employees than for hourly employees. Biweekly payroll can be useful for hourly employees, making it easier to calculate pay and overtime.

• Overtime, tips and other issues: Calculating tips can make payroll more complicated, and overtime hours require careful consideration.

If your organization has a lot of hourly workers, be mindful of regulations such as the Fair Labor Standards Act. If your employees are working more than 40 hours a week, this additional time should be paid at 1.5 times their regular pay.

Company pay date FAQs

What is a payroll process date?

The payroll process date is the date the payroll department processes employee pay. Depending on how quickly the banks process payments, this may or may not be the same as the day the employees get paid.

How do payroll cutoff dates work?

The cutoff date is the last day of the payroll period. For example, someone may be paid weekly with a cutoff date of a Sunday. The payroll process date may be Tuesday of the following week. On Tuesdays, the payroll department will process payroll, paying employees for the hours they worked in the preceding week running Monday through Sunday. This gives managers time to submit timesheets and any additional information required for inclusion in the Tuesday payroll.

How does a 2-week payroll date work?

A two-week payroll means a person gets paid 26 times per year. The exact payment dates will vary each month. This is in contrast to a semi-monthly payroll where a person may be paid on the 15th of each month and again on the last working day of the month. It’s common for payments to be made on a Friday, but the date the payroll is processed may differ from the date the payment appears in the employee’s bank account.