What is a pay period? Definition and common types
Published 5:00 a.m. ET Oct. 26, 2023
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What is a pay period and why is it important?
A pay period is an established timeframe during which workers earn wages. Each period has a start date and an end date. A new pay period begins the day after the previous one finishes.
A defined pay period helps companies and workers. Kim Robinson, FPC and product manager at BambooHR said, “Having a reliable [pay period] is essential as it offers regular salaries, meets legal requirements, accurately calculates taxes, keeps track of employee benefits and streamlines financial planning and record-keeping for both the employer and employee.”
How long is a pay period?
According to the February 2023 version of the Current Employment Statistics (CES) published by the United States Bureau of Labor Statistics (BLS), the most common pay period length is 14 days. More than 40% of employers surveyed use this biweekly payroll schedule.
Other common pay periods include weekly, semimonthly and monthly. Per the most recent CES report, monthly pay periods are the least popular, with around 10% of employers following them.
State law can govern pay period length and pay frequency. For example, Nebraska employers have their choice of pay dates. However, most Rhode Island-based firms must pay their workforce weekly.
Robinson said, “Organizations can choose to pay out on a more customized schedule; however, no less than once a month. Generally, the length of pay periods is determined by the company’s rules, industry standards and legal guidelines.”
Some companies may have different pay period lengths for different employee classifications. For example, an organization could pay hourly, non-exempt workers weekly and salaried, non-exempt team members semimonthly.
How do companies choose pay periods?
Establishing pay periods is a nuanced process that requires careful consideration. Robinson said, “Many variables go into a company’s decision regarding their pay periods, such as state and federal regulations, industry expectations and payroll processing needs. In some locations, legal regulations dictate the minimum frequency for paying employees.”
Assuming your organization’s desired pay period meets all applicable laws, your firm’s human resources and payroll professionals should consider their department budget and bandwidth. Generally, the more frequently your company pays employees, the more expensive and time-consuming payroll processing will be. Plus, professionals involved in preparing and submitting payroll will have more opportunities to make errors.
In addition, there are generally pros and cons to every pay period. Examples include:
Weekly payroll requires more time and effort from HR and payroll professionals. However, employees may appreciate getting paid more often. Biweekly payroll can result in three pay dates during some months, potentially straining the company’s cash flow. However, that third paycheck will often please workers. Semimonthly payroll may not follow a traditional workweek, potentially making it difficult to calculate hourly pay accurately. Monthly payroll can save the company time and money, but it may not be permitted for hourly employees in the state in which your business operates. Plus, the infrequent pay could make it difficult for your workers to stick to a budget.
Depending on your state’s laws, you may need to use a custom pay period to issue a departing employee a final paycheck before the next regular pay date.
How to distinguish pay periods and pay dates
A pay period is a set time frame where employees work and earn wages. A pay date is the day employees receive compensation earned during the previous pay period, typically through check or direct deposit.
How many pay periods are in a year?
The number of pay periods in a year depends on your company’s pay schedule. Here’s a handy reference:
Frequently asked questions (FAQs)
How do you check a pay period start date?
Employees can see the pay period start and end date on their pay stubs. Employers should consult their payroll schedule to learn when each pay period begins.
Can a company change its pay period length?
Generally, employers must maintain a consistent pay schedule. However, companies may change a pay period length if modifications comply with applicable labor laws and employees receive advance notice of the shift. The change must also be made for a legitimate business reason and the pay schedule must remain stable going forward.
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Laura started writing about personal finance in early 2018 when she took a sabbatical from her career in human resources and launched a blog discussing her journey. She realized she could earn a more lucrative and flexible living as a freelance writer, so she soon went all-in on being self-employed. Laura loves to write about managing your money, navigating your career, and running a successful business. Her work has been featured in Forbes, LendingTree, Rocket Mortgage, The Balance, and many other publications. She has also earned an MBA and a Bachelor’s degree in Psychology.
Alana is the deputy editor for USA Today Blueprint’s small business team. She has served as a technology and marketing SME for countless businesses, from startups to leading tech firms — including Adobe and Workfusion. She has zealously shared her expertise with small businesses — including via Forbes Advisor and Fit Small Business — to help them compete for market share. She covers technologies pertaining to payroll and payment processing, online security, customer relationship management, accounting, human resources, marketing, project management, resource planning, customer data management and how small businesses can use process automation, AI and ML to more easily meet their goals. Alana has an MBA from Excelsior University.
