A pay period is the designated timeframe an employer uses to pay an employee for their hours worked in that time. The duration of a pay period can vary based on the employer, but it typically ranges from weekly to monthly. 

During the pay period, employers keep a record of the hours that each employee works, either by using a manual timesheet or relying on timesheet software and apps.

At the end of each pay period, employees receive a payslip that highlights their hourly earnings. The payslip will also include supplemental wages, such as overtime and bonuses, as well as deductions, such as income tax and pension plan contributions.

Types Of Pay Periods

Employers can choose a pay period that best fits their specific needs and employee preferences. Here are the most common types of pay periods in the US:

Weekly

A weekly pay period is when employees are paid every week, typically on a Thursday or Friday, for the hours worked during that week. This equates to 52 pay periods in a year.

The downside is that weekly payroll processing can be costly and time-consuming for employers.

However, employees have access to their money more frequently and are paid promptly, which is often seen as a benefit by both employees and job seekers.

Biweekly

A biweekly pay period is one in which employees are paid every two weeks for the hours worked during that period. This equates to 26 pay periods in a year.

As with a weekly pay period, a biweekly pay period can be appealing to employees. However, some employees may prefer a longer pay period as they get a larger paycheck.

Whilst you have more time to process payroll compared to a weekly pay period, biweekly payroll processing can still be more time-consuming and costly for employers compared to monthly pay periods. 

According to the US Bureau of Labor Statistics, biweekly is the most common pay period in the US.

Semimonthly

A semimonthly pay period is where you pay employees twice per calendar month, typically on the middle and last days of the month. This equates to 24 pay periods a year.

The most significant advantage of this pay period is that it offers a balance between more frequent (weekly) and less frequent (monthly) pay periods. 

However, semimonthly pay periods can be more difficult to manage because it requires tracking employee hours and earnings for changing periods within the month. 

A semimonthly pay period can also lead to inconsistencies in paychecks due to a different number of days worked in each pay period, which can create budgeting confusion for employees.

Monthly

A monthly pay period is when you pay employees once per calendar month, typically on the same day each month. This equates to 12 pay periods a year.

The advantage of a monthly pay period is that it is less time-consuming and expensive for employers, as they only have to process payroll once a month.

However, the downside is that employees have to wait longer to receive their pay, which can impact their cash flow. Although salaried employees or those who work the same number of hours each month will receive the same amount on their paycheck for each monthly pay period, this helps with budgeting.

How Do I Choose A Pay Period?

As an employer, choosing the best pay period depends on several factors, including:

  • Cash flow: You want to choose a pay period that aligns with your company’s cash flow. For example, if there is usually a slow period in the middle of every month, a monthly pay period may not work for your company.
  • Employee preferences: Some employers consider their employees’ preferences when choosing a pay period, as this is a great way to attract and retain talent. Some employees will prefer to receive their paychecks more frequently, such as weekly, while others will prefer receiving a larger paycheck every month.
  • Payroll processing: You’ll also need to consider the time and resources required to process your payroll. For example, a huge company may not be able to process 500+ payslips every week, and would instead choose a monthly pay period.
  • Legal requirements: Different countries and states have different laws regarding payroll and pay periods. Research the legal requirements in your area to make sure your chosen pay period complies.