Federal law doesn’t tell you too much about pay periods. According to the federal government, you can pay your employees at whatever pay frequency you want, but you have to pay your employees at regular intervals. So, you can’t switch your pay frequency all the time. When you pick a pay period, plan on sticking with it for a while.
If you do need to change your pay periods, make sure it’s for a legitimate reason (like to reduce the cost of running payroll), give your employees some notice, and plan on making the change permanent.
Some states, however, have more specific laws about how often you should pay your employees. For example, in New Hampshire, you have to pay your employees weekly. But in Hawaii, you have to pay your employees at least semi-monthly (so, you can pay your employees weekly, but not monthly).
When Should I Pay Overtime?
When you establish your pay period, you’ll figure out when to pay your employees for the time the worked.
For example, let’s say I pay my employees weekly, every Friday. My work week is Sunday through Saturday, so I’ll pay my employees for the time they work this week next week. (So, if someone worked 40 hours between Sunday, October 6 and Saturday, October 13, I would pay them for those 40 hours on Friday, October 19).
But, what about if they work overtime one week? Should you include that on their normal paycheck? For the most part, that’s up to you (but, some states do have specific laws about when to pay for overtime worked).
If you’re calculating payroll by hand, it might be easier to include overtime in the next paycheck because you’ll have more time to figure out how much to withhold. But, if you’re using payroll software, it should be just as easy to include overtime worked in your regular paychecks.