Biweekly Pay

What is biweekly pay

Biweekly pay is a payment schedule whereby employees get paid every two weeks. Employees receive their wages the same day of the week, every other week, resulting in 26 paychecks per year. Biweekly pay is different from semi-monthly pay, as the latter occurs twice a month and results in 24 paychecks annually.

Why it matters

Biweekly pay is an important payroll structure that allows employees and employers to efficiently manage income and track expenses. Because workers are paid consistently every two weeks, they can budget their expenses accordingly to better manage their bills, savings, and discretionary spending. In the months with an extra (third) paycheck, employees get an occasional financial boost without additional effort.

For businesses, especially those with hourly or shift-based workers, biweekly pay simplifies payroll processing, improves time tracking and monitoring overtime, while also reducing administrative complexities in a cost-efficient manner.

Use cases

Biweekly pay allows small businesses with employee count between 10 and 500 to balance efficiency with greater financial control.

In industries like construction, with fluctuating work hours, a biweekly schedule allows payroll and HR teams to accurately track overtime and ensure labor law compliance, without the administrative strain of weekly processing. It also helps contractors manage labor costs more effectively across multiple job sites.

Many dental clinics operate with a mix of salaried professionals and hourly support staff. With biweekly pay, these small clinics can reduce payroll frequency, save time, and reduce clerical errors. With fewer payroll runs, small dental clinics can focus on patient care and front-desk operations.

With a streamlined biweekly pay system, small accounting firms can maintain better oversight of payroll budgets and adjust compensation planning with less complexity. They can align payroll cycles with client billing periods, easing cash flow management and improving internal accounting accuracy. This scheduling also supports busy seasons, like tax time, when work hours can increase and the staff may need to work overtime.

Similarly, for franchise businesses such as restaurants, with high employee turnover and variable work hours, biweekly pay can simplify scheduling and compensation tracking, reduce payroll processing, and ensure consistent paydays to help improve morale and retention of the frontline employees.

Legal considerations for compliance

Small businesses using a biweekly pay schedule must adhere to several legal considerations to remain compliant with Federal, State, and local labor laws. These include:

• Fair Labor Standards Act (FLSA): A Federal law that governs minimum wage, overtime pay, recordkeeping, and youth employment. Mandates employers to pay non-exempt employees at least the Federal minimum wage and overtime for hours worked over 40 in a workweek, regardless of the pay frequency.
• State Payday Laws: Vary by State and determine the frequency of wage payment. Although biweekly pay is generally accepted, some States require more frequent payment for certain types of employees, such as manual laborers.
• State Overtime Laws: May have stricter overtime requirements than the FLSA, such as in California, where employees must be paid daily overtime after working 8 regular hours.
• Wage Theft Prevention Acts: Vary by State to prevent underpayment and increase transparency. For instance, in New York and California, employers must provide written notices about pay rates, paydays, and other terms.
• Recordkeeping Requirements (FLSA and State laws): Employers must retain accurate records of hours worked, wages paid, and related payroll information for at least three years, to demonstrate HR compliance during audits or legal disputes.
• Wage Statement (Pay Stub) Laws: Require each paycheck to be accompanied by an itemized wage statement showing hours worked, pay rates, deductions, and net pay.
• Final Paycheck Laws: Specify rules about when a final paycheck must be issued after an employee resigns or is terminated. For example, in California, the final paycheck must be issued immediately upon termination.
• Deductions from Wages: Employers must refrain from unauthorized deductions and follow Federal and State laws regarding permissible deductions (e.g., taxes, garnishments).
• Family and Medical Leave Act (FMLA): Not directly related to pay frequency, requires employers to accurately track leave balances and compensation for partial periods, if applicable, continued benefits, and job protection during unpaid leave.
• Affordable Care Act (ACA) Reporting: Businesses with 50 or more full-time employees must align their biweekly pay with ACA reporting for proper calculation of hours and eligibility for health insurance.

Considerations affecting biweekly pay

Several key considerations require evaluation to ensure the biweekly pay system aligns with operational needs, compliance requirements, and employee satisfaction. These include:

• Cash flow management: Ensure consistent cash flow to meet payroll obligations every two weeks.
• Payroll processing costs: Consider the cost of payroll software, service providers, or in-house payroll staff.
• Overtime tracking: Track weekly hours to calculate overtime, even if employees are paid biweekly.
• Employee expectations: Balance operational efficiency with employee satisfaction, especially in instances where employees may prefer weekly pay, by communicating the benefits of biweekly pay.
• Benefit accrual and deductions: Configure payroll systems to calculate paid time off (PTO), accruals, deductions, health insurance, and retirement contributions based on 26 pay periods instead of 24.
• Compliance with Federal and State laws: Ensure final paychecks, wage statements, and deductions comply with legal standards, wage payment laws, overtime rules, and recordkeeping requirements.
• Leap tear and extra pay periods: Plan for extra payroll cycle in budgeting and benefit allocation for the years when biweekly pay results in 27 pay periods instead of 26, such as in a leap year.
• Industry norms and competitive practices: Align with common payroll practices in the industry for improved recruitment and retention.
• Payroll system capabilities: Choose a payroll software or provider that supports biweekly scheduling and integrates smoothly with time-tracking, tax reporting, and benefits systems.

Common misunderstandings

Clarifying common misunderstandings around biweekly pay, such as those described below, can help businesses ensure smooth payroll operations:

• Biweekly and semi-monthly are the same: Biweekly pay occurs every two weeks with 26 pay periods per year. Whereas semi-monthly occurs twice a month with a total of 24 pay periods. Both also differ in payday consistency, benefit calculations, and overtime handling.
• Each paycheck is the same amount: Paycheck amounts can vary due to different hours worked, overtime, or unpaid time off. Even salaried employees may see variations if deductions (like benefits or taxes) change during the year.
• Biweekly pay means less money overall: Although individual paychecks might be smaller than a monthly paycheck, the amount received is the same as in an annual salary. It is only spread across more pay periods.
• Overtime is calculated every two weeks: Under the Fair Labor Standards Act (FLSA), overtime is based on hours exceeding 40 per workweek, regardless of the pay schedule.
• All deductions are doubled in a three-paycheck month: In most cases, fixed deductions are only taken from two paychecks per month, meaning the third paycheck is ‘deduction-light’ or free of recurring benefit withholdings.
• Biweekly pay is always better: Although biweekly pay offers benefits like consistent income and easier budgeting, it’s not ideal for every business, especially those with irregular cash flow or who prefer semi-monthly or monthly pay for smoother financial planning.
• Employees don’t need to track hours with biweekly pay: Time tracking for accurate hour records are still required, to maintain compliance with wage and overtime laws.

Common pitfalls and how to avoid them

Here’s how small businesses can avoid common pitfalls of biweekly pay:

• Miscalculating overtime: Avoid calculating overtime incorrectly by applying it to hours worked over the entire two-week period instead of each individual workweek. Carefully track hours on a weekly basis and use payroll systems to calculate overtime correctly according to the Fair Labor Standards Act (FLSA).
• Confusion about pay dates: Prevent confusion about biweekly pay dates by clearly communicating the pay schedule upfront, providing calendars showing pay dates, and sending reminders before paydays.
• Cash flow challenges: Avoid difficulties in managing cash flow by forecasting payroll expenses in advance, maintaining a payroll reserve fund, and aligning billing cycles with payroll timing where possible.
• Benefit accrual and deduction errors: Configure payroll software correctly and review benefit plans to ensure deductions and accruals match the biweekly schedule.
• Inadequate record-keeping: Implement reliable time-tracking systems, keep detailed records of hours and wages, and regularly audit payroll data to remain compliant.
• Ignoring state-specific pay laws: Stay informed about the applicable State and local laws, consult legal experts when needed, and adjust payroll schedules accordingly.

How Fingercheck helps

Fingercheck helps small businesses streamline biweekly payroll by simplifying complex tasks such as time tracking, overtime calculation, and benefit deductions. It integrates employee hours, taxes, and compliance requirements to automate payroll processing, save valuable administrative time, and reduce the risk of manual errors. This enables businesses to stay compliant with varied Federal and State labor laws.

Fingercheck also provides small businesses with easy-to-use reporting tools and customizable pay schedules, allowing for clear communication about pay dates and effective cash flow management. With Fingercheck’s mobile app, employees can clock in and out remotely, view pay stubs, and monitor their hours, increasing transparency and trust.Partner with Fingercheck to maintain smooth, reliable biweekly pay. Get started today!

Fingercheck and any related entities do not offer tax, accounting, or legal advice. This content is designed for informational purposes only and should not be considered a source of tax, legal, or accounting advice. It is recommended that you consult your tax, legal, and accounting advisors before undertaking any related activities or transactions.