An Extra Pay Date for 2016—and Maybe 2015

Society for Human Resource Management (12/07/15) Stephen Miller
With February having 29 days next year, some employers will have 53 weekly or 27 biweekly paydays, instead of 52 or 26, respectively. Payroll departments must plan ahead for the fact that the leap day falls on a Monday, and they must also be aware that “in 2016, Jan. 1 falls on a Friday, so if the employer pays biweekly, the issue of 27 payroll dates may occur in 2015 or 2016, depending on how the employer addresses this issue,” says Staci Ketay Rotman, a partner in the Chicago office of law firm Franczek Radelet. “With a payroll leap year, the effect on employees depends on which day of the week the year begins and ends on.”
Employers forced to decide whether to issue a “bonus” last paycheck in 2015 or address the extra pay period in 2016 must ensure they maintain compliance with offer letters, contracts, or other documents containing compensation information, and if they opt to reduce pay to even out over the 27 weeks, they must consider the U.S. Department of Labor’s wage threshold for overtime exemptions. Moreover, experts say employers will have to contend with morale issues if adding an extra paycheck reduces the amount of each paycheck.