Salaried employees who are paid weekly or bi-weekly will see an extra payday if their payday falls on January 1st (or 2nd in the case of a leap year).
Look at the calendar and count the days – in every year there is one day that occurs 53 times rather than the usual 52 (seven days times 52 weeks a year is 364 days, not 365). In a leap year there are two such days.
This means that if your payday is January 1st (or 2nd in a leap year) salaried employees who are paid weekly will see 53 paydays, instead of the usual 52. Likewise, employees who are paid biweekly and who receive a check on one of the extra days will receive 27 paychecks in the year.
The extra pay period will leave companies deciding whether to reduce the amount salaried employees receive in each paycheck, or if they want to, give employees an extra paycheck. According to the American Payroll Association, most companies opt for keeping the weekly or biweekly paychecks the same and giving their employees an extra check.
For example, if an employee earns $52,000 a year and is paid every other week — or 26 times during a typical year — that base salary is generally divided by 26, earning the employee $2,000 every two weeks; that same employee will have 27 paychecks every 4-6 years. So businesses can choose to either divide the $52,000 base salary by 27, earning the employee $1,926 every two weeks, or continue paying the worker $2,000 every two weeks and absorb the extra cost. For a company with 50 salaried workers making $2,000 every two weeks, that adds up to an extra $100,000 in salaries for the year.
For more information please visit the Department of Labor’s Wage and Hour Division website “Compliance Assistance – Wages and the Fair Labor Standards Act (FLSA)”
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