Anyone ever run into this? How did you resolve it? Apparently it happens ever 11 or 12 years. There is an interesting explanation for this "payroll creep" on google. Would like to hear from others that may have run into this. thanks

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lm texas

We are going to run into this problem in 2008--still trying to figure out the best way to handle. Does make for three months where expenses run high and cause budget problems.

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Kate
HR Manager

We had it happen when we pulled out of a PEO. They required us to cut a final paycheck through 12/31 which would not normally have been paid until after the first of the next year.  I did get lots of questions that year on W-2s since everyone was high by a paycheck. And then the next year I got lots of questions because everyone was low a paycheck. In your situation, you would not be low a paycheck so you should not get questions the second year.

You might also need to look at annual deductions for anyone who gets close to govt limits (such as 401k max deductions).  If they take the max and divide by 26 pay periods rather than 27, the employee deduction will not occur in the last paycheck and possibly not get matched. 

As to the budget, luckily I have a great CFO and CEO.  I just let them know in advance which months will have three payrolls and they budget for it. They usually only see the extra payroll twice, but they deal with the third the same as they would for the other two.

Has anyone ever argued and implemented that the exempt salaried should have the annual rate divided by 27 that year?  Since hourlies would get paid for hours worked, it would not affect them.   It would be an interesting case study!

 

 

Alright maybe it has been a long day for me but for the life of me I can't see the 27th pay period and the 3rd 3-pay month for 2008.  I have looked and looked at my pay dates for 2008.  My first pay date of 2008 is 1/4.  The 2 months that have 3 pay dates are February and August.  Am I misunderstanding what you are talking about?

 

 

If you paid on Tuesdays or Wednesdays, you would have 27 paydates in 2008.  Because your first paycheck would either be January 1 or 2, 2008 and the 27th pay date would be on December 30 or 31, 2008.  Because you pay on Fridays, your first paycheck is January 4, 2008.  The 27th pay for you is on January 2, 2009. 

 You wil run into this problem in 2010.

If your first payroll in 2008 is 1/4 you WILL NOT run into the 27 problem.  You will only have 26 pay periods.  Thank goodness!!!!!!

It can depend on your paydate, which biweekly cycle you are on (odd/even weeks) and possibly what day of the week you pay on.  It doesn't happen often luckily.  It will happen to our payroll in 2009 because our payday falls on 1/1 which means we will pay the day before the holiday 12/31.  Then in 2010 our last payroll will also fall on 12/31.

 

 

We have always viewed it as the employee earning an extra check.  Although our exempt employees are paid based on an annual salary, we view it as an annual based on 26 pay periods or 2080 hours for a year if they worked 40 hour weeks (in our system we have to break everything down to an hourly rate). 

Maybe you should seriously consider changing to a twice a month (1st and 15th) pay day thus eliminating the problem.

Before considering a change in your pay periods, you need to consider several factors.  The first of which is whether or not it would be legal in your state.  But also, you need to consider your workforce.

I would never consider a semi-monthly payroll because 90% of my workforce are non-exempt employees who are scheduled to work 40 hours a week.  For me, dealing with O.T. would be a nightmare and could quite possibly double my payroll time.  I already have to deal with weighted-averages because I have employees who cross between first and second shift pays. To add figuring out how many hours were worked last pay period that have to be counted toward O.T. this pay period would probably send me over the edge!

I have worked at the school 19 yrs and for us we skipped 1 week every 7 yrs to push the pay week back 1 week,we have an accrued amount usually 5 out of 7 years,equal to 1 days pay over a year.We did this in 2006 and now they say we have an extra week that we are being prepaid for at the end of our fiscal(07-08) year and we need to be adjusted 1 more week this year because of the "creep payroll".Does anyone else have this problem?

No time better than the present to go to twice monthly.  Annual salary/24, as long as annual salary/52 beats the minimum salary level requirement.

The last time this happened, some companies changed nothing and simply paid higher wages.  Other companies cut checks to ensure the actual annual salary rate was hit.  If you have people close to the minimum salary level, that could be a problem for you.

Twice monthly would be more of a nightmare for me than it will be dealing with 27 pay dates this year.  I work for a manufacturing plant where 90% of my employees are hourly. Trying to figure out OT when part of the workweek was under one pay period and the rest of the workweek was under the 2nd would probably drive me over the edge!

Yikes.

 

Well, going to weekly pay (what we do here) is also going to be the kind of problem you'd like to avoid.  Great granularity in reporting and so forth but the payroll treadmill moves fast.

Since I don't work (and have never worked) for a company that even thinks about not paying someone every pay period, I'm having a bit of a problem.  Sure, I understand the theory that I make, let's say, $52,000 for the year.  I also understand (and most offer letters for exempt employees state) that I am paid a bi weekly salary of $2,000.  So if that's what I make, then that's what I make.  I should be getting a paycheck for $2,000 every two weeks.  Since most companies pay in arrears, it's for work I performed at prior to the pay date.  For the first pay period of the year, it's for work performed the prior year.  I know that the IRS still looks at it as pay for 2008 and that may have a good part with why some have problems with this.

I suppose if you pay twice per month, that would solve pretty much any delima you would have.