Having both biweekly hourly and semimonthly salaried pay cycles to process can create additional work for the payroll processing department. For discussion we will use these assumptions; hourly employees need to have overtime computed on over 40 hours worked per week and salaried employees are all exempt from overtime.
Because of this situation most organizations will run the hourly payroll every two weeks and the salaried payroll on the 15th and the last day of the month. You don’t have to be a rocket scientist to know the ending dates of the hourly and salaried payrolls are usually going to be different. Obviously this creates additional work for the payroll department. Wouldn’t it be more efficient if both pay cycles could be done at the same time?
One solution is to change all of the salaried employees to be biweekly and adjust their pay period salary accordingly. The reverse is also possible, if your payroll software can support it, and that is to pay your hourly employees semimonthly.
Payroll software that can keep up with hours worked and paid by week can make adjustments to the employee’s overtime earnings by either adding or reducing overtime when necessary. This type of calculation requires hours be entered by date so the system can determine when it needs to pay overtime on a week that has already been partially paid. For example, on the last payroll paid the hourly employees for Monday and Tuesday. When the next payroll is run the system must look to see if the employee had overtime hours for Wednesday through Friday when those days are combined with Monday and Tuesday which were previously paid.
It’s a bit confusing to keep up with; but, good payroll software in conjunction with good time and attendance software can do the job. Check with your payroll and time keeping software provider to see if they can support this scenario.
Mike Hayes-VP Software Development