Co-authored with Danielle Feiger
You’d almost be surprised that an employer would recognize the value in tracking accurate time (it saves a lot of money on payroll costs) and then, at the end of every pay period, estimate the hours for the last few days.
But it’s actually a fairly common practice, though not a very good one. Continue reading
Did you know that businesses are supposed to follow regular payroll schedules? Businesses who don’t can get into big trouble so listen up if you’re new to this.
Employers can’t just pay their employees whenever they get paid from their clients and they can’t postpone payroll because they ran into a big expense. Nope. Employees must be paid in a timely manner, all the time. This means that a business should have some reserve for payroll because when the unexpected happens, employees still need to be paid.
I talk a whole lot on this blog about making sure you don’t short your employees their due overtime. First, it’s not fair to employees and, second, wage and hour lawsuits are expensive!
This is all very important but the opposite concern also happens a lot: overpaying employees.
The exact date at which employees need to receive their final paycheck upon termination is a mystery to many small business owners. The fact that there are laws surrounding the issue at all vexes many who are responsible for paying employees. And it’s not surprising. State laws are complicated and the Fed has no laws about it at all. In the words of the Department of Labor,
“Employers are not required by federal law to give former employees their final paycheck immediately. Some states, however, may require immediate payment.”
Companies have a few choices as to which payroll schedule to use. Knowing which is right for your company, though, takes a little thought. I’m going to go over the pros and cons of each.
The four most commonly used payroll schedules in the U.S. are weekly, biweekly (which means every two weeks), semi-monthly (which means twice a month), and monthly.
Employers usually pay their employees bi-weekly or monthly. Their schedule is not random, however, nor is it just a matter of convention. Employee paychecks must be delivered according to each state’s per-determined timeline.
Employers cannot lawfully decide to pay employees whenever they want. They cannot make up a rule which issues checks every two months, for example. Some states don’t even allow for once per month pay checks. It is a good idea to know your state’s payday requirements so that you don’t ruffle any feathers and end up in court.
Follow this link on the Department of Labor website for a table of state payday requirements. Every state has slightly different requirements.
Whenever a holiday rolls around employers start thinking about how and how much to pay their employees and whether it’s mandatory to pay them at all. Many companies offer 5 to 10 paid holidays per year. This custom has left many employers unclear on whether paying employees for holidays is actually a requirement.