Accounting, Payroll & Pension Issues/Medical insurance deduction when converting from Monthly to Bi-Weekly
QUESTION: Thank you in advance for your help.
My employer is moving us from Monthly to bi-weekly payroll. We are paid in the rears.
I will get a normal check on 31-Dec-12 which includes my December pay and all December deductions.
The first pay date in 2013 will be on Thursday, January 10. This check will be for time from December 31, 2012 through January 4, 2013 (5 days)
A full 2 weeks of insurance payroll deductions will be taken out of that first check (i.e. medical, dental, life...)
I keep arguing with them that I am paying twice for the last week of insurance premium the last full work week in December. Am I wrong? Can they legally do this?
ANSWER: Since you are moving to Biweekly instead of monthly you will receive two checks in January. Once on January 4th and one on January 18th. Instead of taking one monthly amount out like they did on the 31st for the month of December they are taking 1/2 of January insurance on the 4th and 1/2 of January insurance on the 18th. That covers insurance for the month of January.
Yes this is legal.
---------- FOLLOW-UP ----------
QUESTION: Thank you for the quick response Shirley.
Actually, they are dividing the annual amount by 26 and charging us that amount for each pay period, including the first short pay period. It still seems to me that I already paid for 1/2 of the first pay period?
Sorry I am being slow on this.
It might seem that way to you because you just paid on Dec 30th and you are paying again on January 4.
Just think at it in a different way and it might make sense. December insurance was paid with the last check in December.
January starts a new year, a new insurance cycle. You owe insurance for the month of January. Would you rather take it out 26 times which is a lesser amount or the whole amount out the 2nd check of the month which would be a much larger amount from a smaller check. You have to pay for January insurance. You only get two checks in January. The company is dividing it 26 ways so there will be less coming from each check.
So if your insurance is 300.00 a month X 12 months for a total of 3600 a year divided by 26 is 134.46 every payday.
If they took it out of the 2nd check only each month it would be 300.00 out of one two week check.
You would still pay the same amount of insurance.