Tag: payroll system

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Biweekly vs. Semi-monthly Pay: What’s the best fit for hourly teams?

Summary

  • Biweekly and semi-monthly pay may sound similar, but they differ in structure, timing, and how they impact payroll processing.
  • Several states have pay frequency laws that specify how often employers must pay their employees.
  • Payroll software makes it easy to manage multiple pay frequencies, assign them by employee type, and automate overtime and pay period calculations.

Biweekly and semi-monthly are standard popular pay frequency options. While they sound similar, they work very differently. Both involve employees receiving payment twice a month, most of the time, but the structure behind them can significantly impact payroll processing. 

So, which one is right for your team? Let’s break it down.

What is semi-monthly payroll?

Semi-monthly payroll means employees are paid twice a month on specific dates, typically the 15th and last day of the month or the 1st and 15th of each month. This results in 24 pay periods in a year. 

Unlike weekly or biweekly pay schedules, semi-monthly pay dates stay fixed by the date, not the day of the week. That means paydays fall on different weekdays each month and, in some cases, on weekends or holidays, potentially delaying direct deposits if not managed carefully. In many states, employers are still required to issue pay on or before the scheduled payday, even if banks are closed, to stay compliant with payday laws. 

What is biweekly payroll? 

Biweekly payroll means employees are paid every other week on the same specific day, such as the second Friday of each month. This leads to 26 pay periods per year, with two months each year containing three paychecks instead of two. 

Unlike semi-monthly payroll, biweekly follows the same weekday, not the same date, which provides more consistency for employees and simplifies time tracking. 

Biweekly pay is paying employees every other week on the same day (e.g., every other Friday), resulting in a total of 26 paychecks per year. Unlike semi-monthly pay, biweekly payroll means employees are paid on the same day every other week, not on a set date. 

Semi-monthly vs biweekly pay: Key differences

Biweekly PaySemi-monthly Pay
Pay periods/year2624
Pay schedule Fixed day, every two weeks (e.g., every Friday)Fixed dates (e.g., every 15th and 30th)
Payroll taxes and withholdingsMore frequent withholdingSlightly higher withholding amounts per paycheck
Direct deposits and bank timingAlways the same weekdayMay fall on weekends/holidays
Payroll and HR Admin workloadMore runs (26/year)Fewer runs (24/year), but may need adjustments
Overtime trackingEvery 2 weeks, aligns with 40-hour weeksMay split workweeks

Which payroll schedule is better for hourly employees?

To know which is the better payroll schedule, you need to understand how each of them affects your payroll management, particularly overtime pay and shift differentials. You need to figure out which pay schedule makes it easy for you to manage. 

If you manage hourly workers, your choice of payroll frequency directly impacts how you track hours, calculate overtime, or account for shift differentials.

How pay frequency schedules affect payroll workflows for hourly teams

A bi-weekly payroll schedule aligns with a standard 40-hour workweek, which makes it easier to calculate overtime. Since each pay period covers exactly 14 days, it’s predictable and easier to reconcile against time and attendance records. 

Meanwhile, a semi-monthly pay schedule may cut across weeks. For example, a pay period might start on a Wednesday and end two Thursdays later, which can result in a single workweek being split between two pay periods. This can result in challenges with overtime calculations and increases the risks of errors, especially when you don’t have an airtight payroll system.

Other pay inputs: Tips, shift differentials, and bonuses

Consider other sources of compensation, too. Businesses relying on hourly teams, such as restaurants, hotels, retail, and healthcare, may have complex pay inputs such as:

  • Shift differentials 
  • Tip pooling 
  • Bonuses and commissions

So, which should you choose?

Suppose you run a shift-based operation or manage hourly employees. In that case, bi-weekly payroll is usually the better choice because it’s easier to calculate overtime under FLSA rules and align with weekly timesheets. That said, syncing hours with pay has fewer risks of errors. 

Meanwhile, semi-monthly payments typically work better for salaried employees or companies with more fixed or consistent payroll patterns than for hourly staff. While it’s still possible to apply a semi-monthly arrangement to hourly teams, it can introduce difficulties with payroll calculations unless you really have a strong payroll system in place.

Do payroll laws affect pay schedules?

Yes. In many states, pay frequency is regulated by law, which means business owners can’t always choose freely between biweekly, semi-monthly, or monthly pay. 

Some states let employers decide how often to pay their staff, while others set a minimum required frequency (like once or twice a month). In some cases, rules vary by industry, employee type, or business size. 

Here are a few examples:

  • Connecticut: Employers must pay employees no later than eight days after the pay period ends. Employers can apply for permission to use a less frequent schedule but must still pay at least monthly. 
  • Hawaii: Employers must pay employees at least semi-monthly, with paydays no more than 15 days apart. Employees can opt for monthly pay via a formal election process. 
  • Louisiana: In industries such as manufacturing, oil drilling, mining, and public service that employ 10 or more staff, employers must pay wages at least twice a month, ideally spaced about two weeks apart. 

Pay frequency rules vary, so it’s best to check with your state or local government to see if any prevailing pay frequency rules apply to you. This is especially crucial if you operate in different states and localities. 

How payroll software makes pay frequencies easier to manage

The right payroll system can make even the most complex pay schedules feel simple, whether you choose biweekly, semi-monthly, or a mix of both. For teams with hourly staff, multi-location operations, or varying employment types, automation is key. 

Here’s how Workforce.com’s payroll software helps:

Assign multiple pay frequencies to different employees 

There are cases when not all employees in a company are on the same pay schedule. With Workforce.com, you can assign different pay frequencies per worker or department, which helps streamline and automate the process when you have a team with various classifications and certain types of employee roles.

Automate overtime, pay rates, and shift differentials

Workforce.com automatically calculates overtime based on actual workweeks, no matter what pay frequency you use. It also accounts for multiple pay rates, shift differentials, premiums, and other forms of variable compensation. That way, you avoid manual edits or reworks, and it makes payroll easier to process, especially for hourly employees.  

Integrate time tracking and scheduling directly into payroll

With Workforce.com, you no longer have to worry about manually matching hours to pay periods. Time tracking, scheduling, and payroll all function in a single system, which means that employee work hours are easily calculated into wages and that you can see labor costs while creating shifts.

Give employees visibility and control

Employees must have visibility into how much pay they will receive on payday, as well as what factors contribute to their payroll calculations. With a built-in employee self-service portal and mobile app, your staff can: 

  • See upcoming shifts and schedules
  • View upcoming pay dates
  • Update their bank account details
  • See deductions
  • Access pay stubs

Whether you decide to pay biweekly, semi-monthly, or go for another pay schedule, Workforce.com equips you to run payroll without a hitch with built-in time tracking, overtime automation, and the flexibility to manage multiple pay schedules.

Want to see how Workforce.com works for your business? Book a demo.

Additional FAQs about pay frequencies

Are there other pay frequencies besides biweekly and semi-monthly?

Yes. Other pay frequencies include:

  • Weekly: Employees are paid once a week (typically 52 paychecks/year)
  • Monthly: Employees are paid once a month (12 paychecks/year)

Some states restrict or discourage monthly pay for hourly workers due to long gaps between paydays. 

Can employers change pay frequencies?

Yes, but you must provide notice to employees (often in writing) and ensure the change complies with state labor laws.

What happens in a month with three biweekly paydays?

Because a biweekly pay frequency runs every 14 days, two months each year will include one additional paycheck. These extra paychecks don’t increase annual earnings, but they can affect things like benefits deductions, which are often only taken from the first two paychecks. Employers should plan for the added payroll run when budgeting.

Can hourly employees be paid semi-monthly?

Hourly workers can be on a paid semi-monthly pay period, but it can be more complex. This pay schedule often splits workweeks across pay periods, which makes overtime tracking and hourly calculations more challenging. If you pay hourly employees on a semi-monthly basis, you’ll need to ensure your payroll system properly handles overtime based on weekly thresholds, as required by the Fair Labor Standards Act (FLSA).

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A Guide to Accurate and Comprehensive Payroll Reports

Astronaut dog working on a payroll report

Summary

  • Payroll reports are documents that provide companies with insights into their payroll activities and tax liabilities.

  • While payroll reports are usually created for internal purposes, there are some mandatory tax and payroll-related forms that businesses need to submit to government agencies on a regular basis. 

  • You can improve payroll reports by utilizing a dedicated payroll software and time and attendance system that generates higher-quality wage and hour data.

Every month, companies run payroll to pay all of their employees’ wages. This process requires the collection of data, such as hours worked from timesheets, gross pay, net pay, tax withholdings, and so on. This information provides insight into the inner workings of a company and can be used to populate different types of payroll reports. 

Payroll reports are documents created by human resources teams to keep tabs on employee payroll data and a company’s tax liabilities. Depending on the type of payroll report used, these documents usually include information like pay rates, the number of hours worked, overtime logs, any withheld taxes, employer tax contributions, and the amount of paid time off (PTO) taken. 

The importance of payroll reports

From small businesses to larger corporations, keeping track of payroll records is important for maintaining a good relationship with your employees, keeping your business running smoothly, and remaining compliant with tax regulations. 

Payroll reports are great for:

  • Improving employee retention – Payroll reports include information on employee turnover. Monitoring employee churn could help uncover some issues that are standing in the way of your employee engagement. If you are losing more staff from a particular department, you might want to take a closer look to see what might be standing in the way of higher employee retention. 
  • Using data for employee recognition purposes – Payroll software can track milestones, such as when someone is due for a review, a bonus, or a pay increase. Ensuring that such milestones are recognized and rewarded goes a long way toward increasing employee engagement.
  • Maintaining healthy cash flow – Because timesheets and payroll are housed in the same system, your reports include hours worked, overtime consumed, PTO, and sick days taken. Tracking hours worked helps you avoid underpaying or overpaying your staff, ensuring well-budgeted labor costs.
  • Managing taxes – Employers and business owners are responsible for paying company taxes as well as managing employee tax withholdings. Payroll reports help keep data better organized and ready for tax submissions and audits from the IRS. 

Types of payroll reports

Payroll reports differ depending on the information you want to collect, your payroll provider, and any customizations you make to the reports. Some of the most common types of payroll reports are:

Payroll summary report 

These reports contain payroll information about any individual employee, a department, or the company as a whole in a given date range or pay period. They include information such as net and gross wages, tax withholdings, and FICA tax deductions. 

Payroll detail report 

As the name suggests, this is a detailed report on a specific employee or department or the company’s pay history. The report shows every movement and activity separately.

Employee summary report

Also known as a pay stub report – this document contains an employee’s personal, pay, and tax information. Your employees should have access to all of their own summary reports.

Payroll tax liability report

These reports show all tax withholdings per employee, the amounts your company has paid to government agencies, and any pending amounts still owed to the government.

Retirement contributions 

These documents show all payments you have made to employee retirement plans. Such retirement plans include 401(k) and 403(b).

Paid time off (PTO) report

This report provides employers with an overview of all PTO an employee has taken within a calendar year and how much time off they have left. 

Mandatory government forms employers need to file

Payroll reports are internal documents and are rarely, if ever, submitted to external parties. An exception would be if a company is undergoing an audit by the IRS or a state entity or if a workers’ compensation claim is involved. 

There are, however, other kinds of forms employers must submit on a regular basis to local, state, and federal governments. Much of the information needed for these forms can be found in your internal payroll reports, saving you a lot of admin time.  

Some of the most common government tax reports and forms include: 

  • Form 941 – An employer’s quarterly federal tax return that is used to report on federal payroll taxes and includes information like:
      • Employees’ wages
      • Federal income tax withheld
      • Medicare taxes and Social Security tax deductions
      • Employer contributions to Medicare and Social Security taxes

  • Form 940 – This is in relation to the annual federal unemployment tax return (FUTA tax). The FUTA tax is an amount that companies pay to contribute toward “unemployment compensation to workers who have lost their jobs.” The amount could be as much as 6% of the first $7,000 paid to every employee.

  • Form 944 – This form is for small employers whose annual liability for social security, Medicare, and withheld federal income taxes is $1,000 or less. It is filed only once a year instead of every quarter.
  • Form W-2 – A wage and tax statement that employees use to present total gross wage, tax deductions, and benefits. Employers must provide their employees with a copy of this form and present copies to federal, state, and local governments. 
  • Form W-3 – This form is how businesses submit a summary of their wage and tax statements to the Social Security Administration. It accompanies Form W-2. Both are due by January 31 of the following tax year.

  • Certified payroll report – This is a government-mandated report for contractors and subcontractors working on federally funded construction projects. Under the Davis-Bacon Act, certified payroll reports must be submitted to the contracting agency, typically using Form WH-347 provided by the U.S. Department of Labor.
  • State payroll reports – These vary from state to state, particularly when it comes to the frequency of payments.
  • Local payroll reports – In some states, taxes are charged at the city and county levels and have different due dates.

How to organize your payroll reporting process

Regardless of what type of internal payroll report you’re looking to adopt, there are four basic steps to help you get your process organized. 

  1. Identify the type of report you need. Choose the suitable report based on the insight you’d want to gain from your data. Once the report is chosen, identify what information you’ll need to collect to populate it.
  2. Choose the frequency of reports. Unlike government reports, you are free to choose the time periods you’d like to report on. Quarterly reports might result in a lot of unnecessary work for your payroll team. You may decide that issuing annual payroll reports is enough to give you the insights you’re looking for while also avoiding unnecessary burnout.
  3. Collect and input data. This step involves inputting the data you need into your payroll system. Workforce management solutions automate much of this process, making your life much easier while also reducing the possibility of human error. 
  4. Analyze your reports. Double-check your payroll reports to make sure the information you are presenting is accurate. Finally, you should make use of your report findings and the insights you have gained to improve your payroll processes.

Clear and accurate payroll reports with Workforce.com

The first step to getting the most out of your payroll reports is making sure that the data presented in them is accurate. This starts by making sure that things like hours worked and overtime taken have been recorded correctly. 

Workforce.com accurately stores employee data, like pay rates, hours worked, breaks taken, and overtime used. Synced with scheduling, you can track labor costs and hour variances in real-time, perfecting employee time before it reaches payroll. And when you are ready, you can quickly export all timesheets right to your payroll system, setting you up to create the best possible payroll reports for your business.

With Workforce.com, you can generate customizable payroll reports tailored to your needs. You can choose from a library of report templates, and modify it according to your requirements.

Get clear insight into how you pay your employees, including total wage costs, employee compensation taxes withheld, net pay, PTO, payroll deductions, retirement contributions, and other relevant information concerning employee pay. You can filter this information by role, location, team, and employee. 

But Workforce.com goes beyond payroll. It combines payroll, time tracking and HR data in one platform to give you a 360-degree view of your organization.

Workforce.com’s reporting tools can track workforce management metrics like attendance, shift acceptance, and missed breaks, helping you improve shift coverage, punctuality, and wage and hour compliance. On the HR side, it allows you to generate reports on performance reviews, incidents, and warnings to support coaching, policy enforcement, and people development. 

Having all this data in one place helps you spot discrepancies, identify trends, make more informed decisions. You can clearly see what you pay, what your people do, and how your team is growing.

To find out more about how Workforce.com can help streamline payroll reporting, book a demo here.

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How to prevent workforce management system outages: mitigation through redundancy

Summary

  • Workforce management data breaches and outages are a very real threat

  • Businesses should build redundancy and backup plans into their systems

  • It comes down to choosing vendors with reliable data and network security

In light of the ransomware attack on Kronos (UKG) that caused disrupted operations for thousands of businesses across the nation, it is worth reflecting on how to properly build redundancy into a workforce management system so as to mitigate the pitfalls that come with mass system outages.  

As many unfortunate companies and employees experienced with the Kronos (UKG) data breach, having vital attendance, scheduling, and payroll systems shut down and remain inoperable for weeks can be disastrous. Without proper contingency plans and security measures in place, workforce management system failures can result in payroll running late, chaotic scheduling, extremely inaccurate timekeeping, and the potential for sensitive employee information to be leaked. 

Okay, now take a deep breath.

Outages and data breaches do not need to be so stressful or debilitating. Here are several measures you can take to build redundancy into your workforce management system to keep your business running smoothly in the event of a technological emergency. 

Have a business continuity plan

Essentially, this is a document that outlines in detail how a company will remain in operation during a sudden system disruption or outage. A continuity plan like this needs to be mapped out and understood by all parties well in advance to any sort of outage in order for it to work. Drafting up a plan in the moment of failure will do very little good and most likely add to the confusion and stress of the situation, so be sure to put one in place ahead of time. 

To create a business continuity plan, take the three following steps:

  • Identify key business functions. In the case of workforce management systems, these would usually be timekeeping, scheduling, and compliance.
  • Determine the minimum downtime for each function. This will help you gauge the urgency at which measures need to be taken to address outages. It will also clearly define a timeline for when replacement systems may need to be brought in. 
  • Create a plan to maintain operations. Here is where you actually decide on the temporary processes your company will take to continue scheduling and timekeeping. These are usually manual processes taking the form of paper-based tools and simple spreadsheets. In other cases, you might have backup software or hardware. 

Use best-of-breed software

This is undoubtedly the best way to ensure your workforce management system is failure-proof.

When using a traditional all-in-one software system that handles everything ranging from scheduling to payroll processing, you are susceptible to a single point of failure. As soon as an all-encompassing platform like this has a data breach and crashes, your company can be left without the ability to run a single critical business function for up to several weeks.

Instead, companies should use a suite of best-of-breed softwares from a variety of different vendors. Enlisting multiple platforms to perform different functions eliminates the risk of a single point of failure. For instance, if your specialized time and attendance system goes down, you are still left with the ability to use your payroll system which operates on a completely different server. In this case, all you would need to do is document time manually which then you can still plug in for payroll. 

Regularly export timesheets, schedules, and other relevant data

There are many precautionary measures that can be taken during normal business operations that can help mitigate damages from an outage. Exporting timesheets and schedules to store separately from your workforce management cloud is simple, efficient, and often, very useful. 

By routinely exporting and keeping former timesheets and schedules on hand, you effectively create a paper trail which you can use in case of ill-timed audits during an outage. These offline records can also be used as references for when you need to manually create previously automated schedules and timesheets. It’s always a good idea to have business-as-usual models available while in the midst of enacting a business continuity plan. 

Ensure systems have strong IT security infrastructure

Finally, at its core, a workforce management system simply needs to have reliable data and network security. Your business won’t need to suffer the damaging effects of software outages if the software doesn’t become compromised in the first place. 

While data breaches and system outages can happen to anyone, the likelihood of them happening is far lower in systems with proven track records of safety and reliability. You should look for past instances where a provider has fallen short in its IT security and use those red flags to help you choose a secure workforce management platform.

Proper workforce management IT systems should be SOC-2 certified so as to ensure maximum client data security. The system’s online infrastructure should also be hosted in a virtual private cloud, helping to safely isolate it from potential network breaches. 

You should also be sure that your workforce management system runs daily data backups as well as Point in Time Restore points. All backup data should be stored on a separate cloud server too, so that a single outage will not compromise the entire system and all its data.

Don’t let your business remain unprepared for workforce management and payroll system outages. These nightmares can happen to anyone, and the fallout can be severe without proper protocols and backup plans in place. If you’d like to find out more about what to do in the event of a system data breach or failure, contact us today. We’d love to chat.