Expert: Arthur Naman - 7/9/2010

Question
Hello Arthur,

I've always wondered why companies use 26 annual pay periods. Personally, I'm a salaried employee and prefer to be paid once per month at the beginning of the month. Even bi-monthly pay periods are fine.

From an accounting/bookkeeping/financial point of view, is there a benefit to the employer for using the 26 pay period model?

Thanks,
Osman

Answer
I have often wondered about the answer to that question. I also like semi-monthly rather than bi-weekly. Most accounting periods end at month's end so semi-monthly is much easier.

With that said, weekly pay periods are not uncommon. It may be that employers have changed from weekly to bi-weekly rather than switching to semi-monthly when attempting to reduce the number of pay periods during the year. It may be that employees may find it easier to plan for bi-weekly rather than semi-monthly.  I do not know.