What is a payroll frequency?

Payroll frequency definition and meaning

Payroll frequency, also known as pay frequency, refers to how frequently employees are paid and when employers must run payroll. It’s important to choose a payroll frequency that works best for your unique industry, business model, and employees.

What’s the purpose of having a payroll frequency?

The frequency with which you decide to pay your employees is vital. Not only does it allow for a  clear, consistent payment schedule and support budgeting, it can also help you comply with tax and labor laws. In addition, pay frequency can ensure that everyone in your business is on the same page about payroll.

Pay frequency schedules to get familiar with

Here’s an overview of the various types of payroll frequency schedules available.

Weekly

Under a weekly pay frequency, your employees get paid every week and can expect 52 paychecks per year. According to the U.S. Bureau of Labor Statistics, 33.3% of employees receive weekly paychecks.

Monthly

With a monthly payroll frequency, your employees receive a single paycheck every month or 12 paychecks per year. While this option provides larger sums of money, it can make budgeting and financial planning a challenge for some employees.

Daily

A daily pay frequency is usually reserved for temporary employees who complete their work on a day-to-day basis. It’s the least common type of pay frequency and the most expensive because it requires daily payroll processing.

Semi-monthly

If you opt for a semi-monthly pay structure, you pay your employees on set dates, such as the 15th and 30th of each month, even though these days of the week may differ. Your employees will receive 24 paychecks per year.

Bi-weekly

The bi-weekly pay frequency structure is when you pay your employees every other week and they receive 26 paychecks per year. Unlike the semi-monthly frequency, the bi-weekly frequency ensures your employees get paid the same day of the week, such as Friday, for example. Also, there are two months in the year when your employees will receive three paychecks instead of two.

What to consider when choosing a pay frequency

The ideal pay frequency depends on a number of factors, such as:

• Pay frequency laws: Laws surrounding payroll frequency vary by state. Most states set a minimum frequency you’ll need to comply with and you must remain consistent with when you pay your employees. The only states without pay frequency laws are Alabama, Florida, and South Carolina.
• Your employees: Employee-related factors, such as how many employees you have and whether they’re salaried or hourly will help dictate the best pay frequency. Note that you may establish different pay frequencies for salary and hourly employees but doing so might lead to complexities.
• Your industry: The norms and expectations in your industry are important to consider. If you’re in construction, for example, a weekly payroll structure likely makes the most sense.
• Your cash flow: If you’re a larger, more established business, you may have enough cash flow to run payroll more frequently. However, if you’re a startup or smaller organization, your cash flow might only allow for a monthly pay frequency.
• How you run your payroll: Weekly or daily pay frequencies may become overwhelming if you run payroll manually. With payroll software, you’ll find it easier to run payroll more often.

Is it possible to change pay frequency?

As the employer, you do have the right to change how often your employees get paid. However, be sure to weigh the pros and cons before you make the change. If you decide to move forward and change payroll frequency, be sure to communicate the change clearly with enough notice so that your employees can budget and plan accordingly. It’s also a good idea to map out each payday for the rest of the year so that your employees know exactly what to expect and you can ensure they receive their full annual pay.