Expert: Shirley McAllister, CPP, PHR - 1/5/2009

Question
I've seen lots of questions about how to switch from bi-monthly to bi-weekly pay periods, but no details on going the other way.  I'm trying to figure out how we can do it - move from bi-monthly to bi-weekly, with the least amount of pain to the employees.  We currently have no lag time - pay periods end on the 15th and 31st, we're paid for that pay period 3 days later.  It's wreaking havoc on our assistant GM who has been doing payroll for this small company for years.  We're about to double in size of hourly employees though, and the thought of having to double check on all those past timesheets to compute overtime is a nightmare.  And we don't want to make our employees feel they're being shorted, either.  Can you help?  Thanks!

Answer
Bi-weekly or 26 pay periods a year is the easiest way to do an hourly payroll. Cut off one friday and pay the next. It works great.

It is not that easy to switch over, but it can be done. We did this several years ago and although it was a pain at the time it is working great for us now.

What we did is Paid through the last Friday . That meant that employees were short time that they were used to receiving. We allowed them to use PTO or vacation time to make up the difference. They could do that or they could have 1 short check. A few that did not have PTO and would be adversely affected were given a loan for the difference and paid it back in installments through payroll deduction for the rest of the year. We did not do this for many, most either had PTO or were able to live with a short paycheck. We did not do this for anyone that had PTO or vacation pay to use. Out of 160 people we did 5 people on loans.

I think if you work it right it will not be that big of an impact.  If you wait until February and instead of cutting off on the 15th and paying on the 18th you would cut off on the 13th (Friday) and pay on the 20th (the next friday). That is only two days longer than usual. Since the 15th is on Sunday it would cut off on the 13th anyway unless you work Satuday and Sunday.

Shirley