Our colleagues Michael Kun and Jeffrey Ruzal at Epstein Becker Green have a Wage & Hour Defense Blog post that will be of interest to many of our readers: “Unusual Wage Payment Issue in 2015 for Many Employers: 27 Bi-Weekly Pay Periods, Not 26.”
Following is an excerpt:
There is an unusual wage issue for 2015 that will affect many employers that pay exempt employees on a bi-weekly basis (rather than weekly, semi-monthly or monthly).
It is an issue that may have both financial and legal repercussions.
And it is an issue we suspect many employers had not noticed or considered.
With 52 weeks in a year, there normally are 26 bi-weekly pay periods in a calendar year. In 2015, however, there will be 27 for many employers.
This oddity occurs every 11 years. In short, it happens because 26 bi-weekly paychecks only cover 364 days in a year, not 365 (or 366 in Leap Years). Those extra one or two “unaccounted for” days add up to create an additional pay period every 11 years.
The extra pay period is more than just an oddity. It raises a dilemma for those employers that pay exempt employees on a bi-weekly basis – either pay employees more than intended, or face a possible wage payment claim.