What is a Pay Period? How Many Pay Periods are in a Year?
A pay period is a specific and recurring length of time
where you record how many hours your employees worked and pay them for that
time worked. In other words, it’s the number of days a team member works
between paychecks. At the end of the period, they’re paid for their total hours
Your pay period determines how often your staff is paid, how
many paychecks they’ll receive each year, and how much income tax is withheld
from each paycheck. So, it’s one of the first decisions you’ll need to make
when you start hiring workers.
Common pay periods are weekly, bi-weekly, semi-monthly, and
monthly. Keep reading to learn more about each frequency.
How many times will your employees be paid?
The number of pay periods in a year depends on how
frequently you distribute paychecks to your staff.
Weekly – There will be 52 pay periods in
a year. If you want to pay your salaried employees weekly, divide their annual
salary by 52 to determine how much they’ll make each paycheck. Weekly pay
periods are common for hourly staff because you’ll track their hours worked one
week at a time.
Bi-weekly – You’ll pay your workers once
every other week, so there will typically be 26 pay periods per year. If you
want to pay your salaried team members every other week, divide their annual
salary by 26 to determine their gross amount per paycheck. About once every 11
years, you might end up with 27 pay periods. If you pay hourly staff bi-weekly,
they’ll just bring home a little extra that year. For salaried workers, you can
pay them extra these years or adjust their paychecks to make sure they’re still
making the same amount as every other year. Like weekly, a bi-weekly pay
frequency is common for hourly employees.
Semi-monthly – You’ll pay your workers twice
a month or 24 times a year. It’s common to pay your employees on the first and
16th of the month, or the 15th and the last day of the
month. Semi-monthly payroll periods are common for salaried staff because you
do not typically have to track their hours worked.
Monthly – There will be 12 pay periods in
a year because you pay your workers just once a month. Monthly pay periods are
great for paying sales commissions.
Type of Pay Period
Paychecks Per Year
Once a week
Once every other week
26 (sometimes 27)
Twice a month (like
on the 1st and 16th)
Once a month
What does the law say about pay periods?
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, butyou must pay them 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 team some notice, and plan on making the change permanent. Learn more about switching pay periods.
Some states, however, have more specific laws about how
often you should pay your staff. For example, in New Hampshire, you’re required
to pay your employees weekly. But in Hawaii, you must pay your team at least semi-monthly (so, you can
pay weekly but not monthly).
When you establish your pay period, you’ll figure out when
to pay your employees for the time they worked.
For example, let’s say I pay my staff weekly – every Friday.
My workweek is Sunday through Saturday, so I’ll pay my team for the time they
work this week next week. So, if
someone worked 40 hours between Sunday, October 6 and Saturday, October 12, I
would pay them for those 40 hours on Friday, October 18.
But, what about if they work overtime one week? Should you
include that on their regular 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, like Workful, it will be just as easy to include overtime worked in your regular paychecks.