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Coverting from Semi-Monthly to Biweekly payroll

Chris94066
edited October 2006 in General Payroll Topics
We are a California employer.
I'm contemplating the pros and cons for converting to a biweekly payroll.

The Pros are:
1. Two extra paychecks per year
2. Fewer over/under paid employees
3. Reduced garnishments (for support order paying employees)
4. Smaller tax liability

and the only con I can come up with is:
* reduced net pay (for non exempt employees)

and thats it.

With our semi-monthly payroll, we are paying both in arrears and current.
This is impossible to maintain, with employees often being over and under paid. To convert to biweekly would reduce these problems, let alone it would better enable us to be compliant with the law.
But when an employee is told that they'll get a reduced net pay, and these employee's live paycheck to paycheck, how is it possible to convert?

Any comments are appreciated.

_______________________
Chris Lindstrand, CPP

Comments

  • Maybe you could convert on a month that will have three paychecks instead of two. That may make the conversion easier on the employees.
  • rrupert
    rrupert ✭✭✭
    One con is the budgeting/accounting side. Not a huge one, but there will be two months where the payroll expense budget is different than the other 10.

    Another con for the employee is that the payrolls don't fall on specific days each month (it is nice paying bills when you know you will get paid mid and end of the month and your bills are due first of the next month).... But they do fall much more consistently (always get paid every 14 days). Which is a pro for the payroll dept -- you always know what days payroll is run -- I know that I can't have every other Monday off!

    One pro is that is is much easier for everyone involved to know when things like timesheets, payroll deduction changes, etc. are due into payroll to affect it.

    Just one note -- The garnishments would be smaller per check but the same for the whole year... I think you meant that, but I wanted to clarify just in case.

    rr
  • You can convert this at the begining of the year 2007, send communications out to the employee's that this will occur, so they can prepare them selves for the change. Hold meetings with any employee's who has questions about what there pay will look like on a bi-weekly basis and any changes to deductions of benefits, garnishments etc.. will result too.

    This will work out best for everyone, we went thru this two years ago.
  • Our company switched from semi-monthly to biweekly several years ago. At the same time they switch from paying us on the day of the pay period ending to a four day delay. They offered the employees who live paycheck to paycheck an option to cash in usused vacation time or take an advance to be paid back later to help out. As long as you give them enough notice you should be ok.
  • Another pro for BW is that in CA the paycheck must specifically notate the pay period dates and what hours are being paid on that check. Some software/payroll companies have difficulty doing this. Biweekly makes it very easy for an employee to tie their check to their timecard.

    We noticed (and celebrated!) a huge reduction in phonecalls on payday when we went BW. No more "but I worked 88 hours, why'd I only get paid 86.67?".

    We also offered a $300 pay advance on that first paycheck since it was short compared to SM. We then deducted the advance in $100 increments over the next 3 checks.
  • I am trying to explain to my CFO why its not a good idea to switch from semi to bi in the middle of the year - but rather the beginning of the year. I gave her every reason to not but does anyone think this is a okay thing to do?

  • Switching will be a problem no matter when it is done. Give employees a period of time to prepare for the switch, however, if you are going from semi-monthly to biweekly, it can be timed on a date that the pay date for both periods is the same. In this case, end of 2022 might be a good time to switch over because the last pay of 2022 on semi monthly (December 30) could have the next day, (Dec 31) start the first biweekly period for 2023. That should minimize the impact on employees living paycheck to pay check.