How Often Should You Run Payroll?

If you’re an employer, running payroll is inevitable. But how frequently should you be processing payroll? To answer this multifaceted question, you’ll need to consider many factors — including common pay frequencies, federal and state requirements, and your business and workforce needs.

Common pay frequencies

Typically, employees are paid on one of the following basis:

• Weekly (once per week)
• Biweekly (once every 2 weeks)
• Semimonthly (twice per month)
• Monthly (once per month)

Though employers can choose to pay daily, few employers adopt daily payrolls, as they are usually not practicable.

Most employees are paid biweekly

According to data from the Bureau of Labor Statistics (BLS), most employees in the United States are paid biweekly, as illustrated below.

However, when broken down by employer size, there’s a slight difference in the numbers.

As you can see, most employers with only 1-9 employees pay weekly, with biweekly coming in a very close second. However, for all larger businesses, biweekly is most common.

Very small employers — such as those with less than 10 employees — may be able to pay more frequently. Because they have fewer payroll transactions, payroll processing is often straightforward. But as their business grows, their payroll needs become more complicated and the cost of running payroll increases. To save time and money, businesses often adopt a less frequent pay schedule, such as biweekly.

Keep in mind that you cannot arbitrarily choose to run payroll less often, because there are laws to consider.

Fair Labor Standards Act

The FLSA governs federal minimum wage, overtime, recordkeeping, and child labor laws, but it does not mandate pay frequencies. However, the U.S. Department of Labor (DOL), which oversees the FLSA, says, “Wages required by the FLSA are due on the regular payday for the pay period covered.” In other words, FLSA-covered employers must establish a regular payday and pay wages by that time.

The FLSA gives you some leeway when it comes to choosing a pay frequency, since it does not specifically define “regular payday.” State pay frequency laws, however, are more precise.

State pay frequency requirements

Most states designate minimum pay frequencies that employers must comply with — whether that’s daily, weekly, biweekly, semimonthly, or monthly. So before you establish a pay frequency, be sure to check state law.

Most states designate minimum pay frequencies that employers must comply with — whether that’s daily, weekly, biweekly, semimonthly, or monthly. So before you establish a pay frequency, be sure to check state law.

State pay frequency tips for employers:

• You cannot pay less often than the state-mandated minimum frequency, but you can pay more regularly if you want. Let’s say the state-mandated minimum frequency for your business is semimonthly or monthly. In this case, you can pay weekly or biweekly if that works for your business.
• Review state law carefully for additional guidelines, such as paydays for nonexempt and exempt employees and manual workers. For example, manual workers in New York typically must be paid weekly.
• If the state does not have minimum pay frequencies, remember that the FLSA still stands — meaning you must establish a regular payday and compensate your employees by that time.

In most states, the minimum pay frequency is semimonthly, but as mentioned earlier, most employers opt for biweekly.

Why biweekly payrolls get the most love

Employers and employees prefer biweekly pay schedules for various reasons, including the following:

• Biweekly can be seen as a compromise, a middle ground between employers and employees. It enables employers to pay less frequently than weekly, which cuts down on payroll administration costs. At the same, biweekly allows employees to be paid within a reasonable time frame, unlike semimonthly and monthly payrolls.
• When it comes to hourly, nonexempt employees, biweekly payrolls are easier to understand and administer than semimonthly payrolls. With semimonthly payrolls, timekeeping and payroll processing can get complicated because timecard submission deadlines and pay period lengths can vary from month to month. This can be confusing for hourly, nonexempt employees to understand. With biweekly payrolls, timecard submission deadlines and pay period lengths stay the same.

Biweekly is not ideal for every business or situation

Despite the popularity of biweekly payrolls, it is not the right or only solution for some businesses. Depending on your business and workforce needs, other pay frequencies may be more appropriate — such as daily, weekly, biweekly, semimonthly, monthly, or a combination of these.

Large organizations with many hourly and salaried employees may have multiple payrolls — such as biweekly for hourly, nonexempt employees and semimonthly for salary, exempt employees. Small businesses may choose to pay everybody on a biweekly or weekly basis, to make payroll processing simpler and more cost-effective. In some businesses, executives are paid less frequently (such as monthly) than other employees.

“In 2020, 73.3 million workers age 16 and older in the United States were paid at hourly rates,” representing 56% of the U.S. workforce.

It’s important to note that most employees in the United States are hourly. According to the BLS, “In 2020, 73.3 million workers age 16 and older in the United States were paid at hourly rates,” representing 56% of the U.S. workforce. Hourly employees are more likely to live paycheck to paycheck than salaried employees. This is a major reason why so many hourly employees are paid at least weekly or biweekly.

Bottom line

Your pay frequency should be feasible for both you and your employees, plus in line with applicable federal and state requirements. Keep in mind, as well, that if you outsource payroll processing to a service provider, your pay frequency influences the provider’s cost.

Generally, the more frequently you run payroll, the higher your payroll administration costs — and potentially, the more room for errors. So, try to strike a balance, where you’re not paying too frequently or too infrequently.

Remember, running payroll is not just about regular paydays

At times, you may you need to run payroll outside of your regular payroll cycle, such as when:

• An employee is underpaid, and waiting until the next regular payday is not an option
• Timekeeping issues that resulted in the employee not being paid at all, such as the supervisor forgetting to submit the employee’s time worked to payroll
• An employee is terminated and their final wages are due immediately or shortly
• An employee receives a salary advance or other compensation, outside of the regular payroll

Off-cycle payrolls can escalate payroll administration costs, because of the extra time spent processing manual checks and reconciling them in the payroll and accounting systems. While you might not be able to totally avoid off-cycle payroll runs, do your best to minimize them.