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Figuring Out How Often to Pay Employees

 

Weekly, monthly, quarterly — how often should you pay your employees? The answer varies, but the good news is that you can set your own wage payment schedule. The law says, however, that your payment schedule must be consistent. You can't pay your employees weekly this month and then tell them next month, "Gee, sorry, we're going to a quarterly schedule now." Whatever you decide to do, you have to be consistent about it.

State Pay Day Requirements

In addition to federal laws regulating wages, states have also enacted laws regulating when people get paid for their work. These laws, called state pay day laws, vary according to the state. Most state pay day laws require that employees be paid at least twice a month, while others mandate monthly payments. The general rule of thumb is to pay employees at least biweekly.

Some states have very complicated pay day laws. In Arizona, for example, paychecks must be issued no more than 16 days apart, and employees must receive at least two or more checks per month. Michigan has the least restrictive laws, with paycheck frequency determined by occupation. Because no two states govern wage frequency the same way, business owners have to do their homework and double-check the requirements for their particular state.

Since wage laws can and do change frequently, it's important to know your state's current regulations. View the chart on FindLaw or visit your state's Department of Labor website for more details.

Hourly or Salaried Employees

You can pay hourly or salaried employees at different times. For example, you may choose to pay hourly employees weekly, and salaried employees twice a month. As long as your payment schedule complies with state requirements and is consistent and clear for employees to understand, you should be fine.

Because issuing paychecks more frequently ends up costing employers slightly more over time, most employers want to issue as few checks as possible. Employees, on the other hand, want to be paid more frequently. You've got to add up the costs of payroll processing and direct deposit, as well as other costs associated with issuing paychecks, and see how they align with your state's pay day laws. Only then can you determine the best pay schedule for your firm. Just make sure it's fair, complies with state and federal laws, and clearly shows employees when they can expect to get paid. That will make everyone happy!

 

 

 

 
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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