Understanding Biweekly Pay Periods: Why 27 Can Occur and What to Expect
Bi-weekly pay periods, a frequent payment frequency for many employees, typically occur 26 times a year. However, in more rare instances, you may experience 27 bi-weekly pay periods. This can be a confusing proposition for many. This article aims to break down the reasons behind this occurrence and provide insights into how payroll management handles such variations.
Yearly Distribution of Biweekly Pay Periods
In a standard year, consisting of 52 weeks, dividing by two for bi-weekly pay periods indeed yields 26 periods. However, the true complexity lies in the intricacies of a calendar year and its additional days. Since a year typically has 365 days (with 366 in a leap year), the 52 weeks total 364 days. The extra day (or two in the case of a leap year) means that once every 11 years, an additional pay period can occur. This phenomenon is more common in organizations that pay employees bi-weekly.
Reasons for 27 Biweekly Pay Periods
The occurrence of 27 biweekly pay periods can be attributed to two primary reasons: the way the year aligns with the pay cycle and specific payroll schedules.
Year Alignment with Pay Cycle
Bi-weekly pay periods follow a calendar that splits each year into pay periods, each consisting of two weeks. Typically, the first pay period starts around the beginning of the year, for instance, the first Friday in January. However, if the year begins early (a pay period starts in late December and overlaps into January) or ends early (a pay period ends before the last day of the year), it can result in an extra pay period, bringing the total to 27.
Specific Payroll Schedules
(...) Some employers may structure their payroll schedules to include 27 pay periods, often to align with specific company operations, benefits, or even tax considerations. This can be particularly common in sectors with seasonal fluctuations where precise financial reporting is necessary.
Key Considerations for Employers
For employers, managing 27 bi-weekly pay periods involves careful planning and coordination. Adjusting for these extra periods is not only important for financial accuracy but also for employee satisfaction and benefits calculations.
Impact on Hourly and Salary Employees
Hourly employees should receive payment every other week, regardless of whether there are 26 or 27 pay periods. This reflects the actual hours worked in a 365-day or 366-day period. Similarly, for salary employees, the payroll department may divide the annual salary by 27 instead of 26 for the year, adjusting deductions and garnishments accordingly.
Adjusting Deductions
For benefit deductions and any garnishments, if the payroll is based on annual amounts divided by 26 pay periods, the number should be adjusted to 27. However, it is often a better choice to set deductions for 26 weeks and defer those for the 27th pay period. This approach simplifies payroll and ensures consistent benefit payments.
Conclusion
The occurrence of 27 biweekly pay periods is relatively rare and usually happens due to the unique alignment of the calendar and employer-specific payroll schedules. While it adds a layer of complexity to payroll management, understanding the reasons behind it and taking appropriate measures can help maintain financial accuracy and employee satisfaction.