Before you get too excited, let me explain. Because New Year’s Day falls on a Friday this year (or next year, technically), some employers are opting to pay their employees the day before, giving them an extra paycheck in 2015. On the flip side, employers can hold off and pay their employees at a later date, but putting off an employee’s pay is not something I would suggest. Either way you work it, one year (2015 or 2016) will end up with an extra pay period, so in some sense, you could say you’re getting a bonus, right? Right. So, if your pay day falls on Friday, January 1st you have a couple options to consider.
Wait, This Sounds Familiar
Depending on your company’s pay frequency this will happen every handful of years or so. Generally, those affected are employees who are salary and exempt from overtime hours. So, hourly employees need not worry, you’ll still be paid based on the hours you put in. However, those who receive a salary should be prepared to see a change in their pay to some capacity (don’t worry, I’ll explain more below).
The Employee Impact
The reality is most of us count on getting our paycheck on time, and really, we depend on it. Bills are due, groceries may need to be restocked, and the car probably needs gas. Pushing off a paycheck, even for a day or two may cause more of a hardship for your employees than you even know. Not to mention, employee morale will definitely be hit by this. Before you make a decision you should first consider how this pay dilemma will impact your company’s most valuable asset, your employees.
The Employer Impact
No matter what you do this holiday disrupts your process and will force you to make some adjustments one way or another. Things such as income tax withholding and benefit elections will need to be adjusted according to the rates for the current year, whether that be 2015 or 2016. While this may seem like a headache, it beats the other alternative which is transitioning your pay period to different schedule all together. In an article SHRM states that moving to a monthly schedule, for example, would alleviate this problem, assuming your employees are exempt, of course. However, as another alternative you could lessen the amount of each paycheck to even out the pay at the end of the year when that extra paycheck is issued.
For example: A salaried employee makes $40,000 annually and is paid on a biweekly basis. Instead of splitting that pay into 26 pay periods (bi-weekly), you account for the extra pay date and lessen each check to work out to the same annual salary, even with 27 pay periods.
What is your company’s plan to counter the extra pay period? Share with us in the comments.