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Biweekly pay is a pay period structure in which employees are paid on the same day every two weeks. For example, with biweekly pay, employees may be paid every other Friday.
Why Use a Biweekly Pay Frequency?
When it comes to determining your company’s pay frequency, there are a few factors to consider.
From the perspective of employees, receiving pay more frequently is generally better. The more frequently employees get paid, the more easily they can manage their income and avoid potentially running out of cash before the next paycheck.
However, from the perspective of employers, paying employees more frequently can be an expensive hassle. Most third-party payroll providers charge a fee for every payroll run. In addition, managing payroll paperwork and collecting timesheet approvals can be time-consuming.
For many employers and employees, biweekly pay periods represent a happy medium between more frequent weekly pay periods and less frequent monthly periods. In fact, biweekly pay is the most common pay period used by businesses in the US today.
Keep in mind that some states require biweekly or more frequent pay periods for certain employees. For example, Massachusetts and New Hampshire require weekly or biweekly pay unless an employer receives an exception from the labor departments in these states.
How to Calculate Biweekly Pay
Calculating biweekly pay involves a straightforward process. Here’s a step-by-step guide to calculate an employee’s biweekly pay, whether they are salaried or hourly:
For salaried employees
- Start with the employee’s annual salary.
- Divide by pay periods: There are 26 biweekly pay periods in a year. Divide the annual salary by 26.
Biweekly Pay = Annual Salary / 26
Note: Keep in mind that you if an employee has any additional pay or holiday pay, you’ll need to account for this, too.
For hourly employees
- Identify the employee’s hourly wage.
- Calculate regular hours worked: Multiply the hourly rate by the number of regular (non-overtime) hours worked in the two-week period.
- Calculate overtime pay: If the employee worked overtime, calculate the overtime pay. Typically, overtime is paid at 1.5 times the regular hourly rate. Remember, in the U.S., overtime is usually calculated for hours worked over 40 in a workweek.
Overtime Pay = Overtime Hours ×Hourly Rate × 1.5
- Add regular and overtime pay: Add the regular pay and overtime pay together for the total biweekly pay.
Advantages of Biweekly Pay
Biweekly pay has several advantages over weekly, semi-monthly, and monthly pay periods:
- More frequent pay: Employees get paid every other week, which many employees prefer over being paid once per month.
- Consistency and predictability: Employees appreciate the regularity and predictability of biweekly paychecks, which makes personal financial planning easier.
- Easy to calculate overtime: Overtime is calculated on a weekly basis, so paying employees every other week makes it easy to calculate their overtime for each pay period.
- Lower costs than weekly pay: Biweekly pay involves half as many payroll runs as weekly pay. That saves time and money on payroll.
Disadvantages of Biweekly Pay
Biweekly pay also has some disadvantages for employers, particularly compared to monthly pay:
- Higher costs than monthly pay: Biweekly pay involves twice as many payroll runs as monthly pay, which adds to the time and money spent on payroll.
- More paperwork: Running payroll every other week requires more paperwork than running payroll once per month. That increases the administrative burden of payroll and leads to more opportunities for errors.
- Inconsistent pay dates: Since the days of the week vary, the actual pay date can shift, which might cause confusion or inconvenience.
💡 Pro Tip:
Use an employee management app that keeps automated timesheets for payroll, like Connecteam. That way, the app automatically calculates all employee total hours and you can export the data right into your payroll software for easy processing.
Alternatives to Biweekly Pay
In states where biweekly pay isn’t a requirement, companies can choose from several other common pay frequencies.
Weekly pay
Weekly pay is beneficial for employees because they get access to their pay very frequently. Weekly pay also makes it easy to calculate overtime. However, running payroll weekly can be expensive.
Semi-monthly pay
Semi-monthly pay is a system in which employees are paid twice per month on the same days each month. For example, employees may be paid on the 15th and last day of each month.
Semi-monthly pay can be useful for budgeting purposes since pay periods may line up with the start and end of each fiscal month or quarter. However, semi-monthly pay can also be confusing because paydays fall on a different day of the week each period. As a result, employees may not know when to turn in their timesheets. Calculating overtime can also be tricky since pay periods do not always line up with workweeks.
Monthly pay
Monthly pay is often favored by employers because it reduces the time and cost associated with payroll. It also makes it easy for employees to remember when to turn in their timesheets.
However, a month can be a long time for employees to go between paychecks. Many employees prefer more frequent pay periods.
Multiple pay periods
Companies don’t necessarily have to use the same pay period for all employees. Some companies use weekly or biweekly pay periods for hourly employees and semi-monthly or monthly pay periods for salaried employees.
Whatever pay frequency your company uses, it’s important to keep your pay periods consistent. That way, employees always know when they can expect to be paid and can remember to submit their timesheets on time. Your pay periods should be specified in your company’s employee handbook.
Conclusion
Biweekly pay involves paying employees every other week on the same day of the week. It is the most commonly used pay period in the US and is required in some states. Biweekly pay keeps payroll costs low while also ensuring that employees get paid more frequently than once per month.
