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

Question
We currently pay current and semi-monthly.  We have tossed around changing to bi-weekly in arrears.  Can you give me some resources on how to do this?  When is the best time to do this?  Is the first payroll of the year the best time?  We are a multi state employer.  Are there any roadblocks we need to be aware of if we make this change?  Any help or suggestions you can give me are greatly appreciated.

Answer
There really is no easy time to do this. Bi weekly is a much easier way to pay hourly employees and they like it once it is established.

We did this back in 1996 I believe. We allowed those that would be short pay to use Vacation time or personal time to make up the difference. We had a couple that did not have accrued time to use and we allowed them to take an advance and pay it back over several pay periods.

I don't think it matters which month you transition in. You should give a 30 day notice to the employees that this will be happening before you switch and how it will be handled.

If you have salaried exempt employees and you are switching from semi monthly to bi weekly you have to figure out how much has been paid for the year, than subtract it from the total annual salary for that employee and divide the difference by the remaining bi weekly pay periods in the year if transitioning in the middle of a year. If starting at the 1st of the year than salaried exempt annual salaries are divided b 26 pay periods instead of 24 pay periods.

Shirley