Everything You’ve Ever Wanted to Know About Pay Periods

Everything You've Ever Wanted to Know About Pay Periods
5
min read
October 21, 2020

How many pay periods are in a year? What pay period are we in? When are there three pay periods in a month? 


If you’re a small business owner, you’ve probably asked most of these questions aloud or in your head. 


Many parts of running a business are puzzling. Payroll doesn’t have to be. This guide to demystifying pay periods will answer all of your payroll questions. 


Here’s what you’ll learn:


What Is a Pay Period? 

A pay period is the recurring time frame during which an employee’s work hours are tracked and paid. It’s based on the schedule that payroll departments follow for paying out employee compensation.


According to the U.S. Bureau of Labor Statistics, bi-weekly is the most common payroll schedule in the United States. Therefore, the most common pay period length is two weeks or 10 business days. 


Pay periods can also occur on a weekly, semimonthly, or monthly basis.

How Is a Pay Period Calculated? 

Companies decide what pay period length they want to run their payroll on. 


This decision can be based on a variety of factors, like when the company gets paid for its products and services, or how often employees need money. There’s also state law to factor in — you may prefer to pay monthly while state law requires bi-weekly payments.


For example, a company that employs mostly hourly workers might find it beneficial to have a week-long pay period. Weekly payments are easier for financial planning and make employees happier.


However, a company that bills its clients at the end of the month and has mostly salaried employees may prefer to pay its employees less frequently — a bi-weekly basis is typical.

How Long Is a Pay Period?

A company’s pay period length depends on its selected pay schedule. 


Here are some typical pay period lengths for common payroll schedules:

Weekly Pay Period Length

A weekly pay period is one week long. 


Although the traditional work schedule runs from Monday through Friday (five days long), a  weekly pay period is always seven days long.


Example of a weekly pay period: June 1 - June 7

Bi-weekly Pay Period Length

A bi-weekly pay period is two workweeks long, which constitutes 14 calendar days. 


Example of a bi-weekly pay period: June 1 - June 14

Semimonthly Pay Period Length

A semimonthly pay period lasts half of a calendar month. The number of days in a semimonthly pay period depends on how many days there are in the month in question, which is why a semimonthly pay period may involve a different number of calendar days than a bi-weekly pay period. 


Employees are only paid twice each month on a semimonthly payroll schedule.


Example of a semimonthly pay period: June 1 - June 15, or February 1 - February 14

Monthly Pay Period Length

A monthly pay period is one calendar month long. The number of days in a monthly pay cycle depends on the month in question.


Example of a monthly pay period: June 1 - June 30, February 1 - February 28

How Many Pay Periods Are in a Year? 

The number of pay periods in a year depends on which payroll schedule your company uses. 


This is how many pay periods there are in a year based on common payroll schedules:

What Is the Difference Between Pay Period and Pay Date?

A pay period is the length of time during which you work, and a pay date is the day on which you receive a paycheck for your work. 


Let’s explore these concepts further.


A pay period is the time frame in which work is being done and paid for. Pay periods are typically referred to by their number.


Specifically, a bi-weekly payroll schedule has 26 pay periods per year. So the first two weeks of January would be pay period one, and the second two weeks of January would be period two, and so forth.


A pay date is the date on which companies pay employees for their work. Friday is the most common payday.


It can take a few days to process payroll. Therefore, the last day of the pay period is typically not when employees get paid for their work from that pay period. The pay date for the current pay period might be on the last day of the following pay period.

Bi-weekly Pay Schedule FAQs

The bi-weekly payroll schedule is the most common in the country and therefore sparks many questions. 


These are the most-asked questions about bi-weekly pay periods:

Why Are There 26 Pay Periods in a Year?

There are 26 pay periods in a year when your company runs payroll on a bi-weekly schedule. That is because there are 52 weeks in a year. 


If one period covers two weeks, 52 weeks divided by two weeks results in 26 two-week pay periods in a year.

Is It Possible to Have 27 Pay Periods in a Year?

Yes, it is possible to have 27 pay periods in a year. If you run the payroll on a bi-weekly basis, you could have 27 pay periods whenever there is a leap year.


If you run the payroll weekly, you could have 53 pay periods in one year even when it isn’t a leap year. The number of pay periods depends on which day of the week you pay employees.

Which Months Do I Get Paid 3 Times in 2020?

With a bi-weekly payroll cycle, your company may have to pay its employees three times in January and July of 2020.


Why? Friday is the most common payday. There are six Fridays in January and July in 2020. Because of that, each of those months has three bi-weekly pay periods.

Final Thoughts: Pay Period FAQs

Pay period schedules may be one of the most confusing parts of payroll processing. 


Who decides that employees should be paid every two weeks? Why do employees get paid more often one month than another? Why are there extra pay periods from time to time? 


With Hourly, you can stop worrying about pay periods and focus on the things that move the needle forward in your business. Get started with a 14-day free trial.

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