Ah, the leap year – that one extra day every four years that can introduce an additional pay period into your payroll. This added layer of complexity may lead to payroll errors, skewed annual reporting, and last-minute corrections.
However, navigating leap-year payroll complexities can be an easy experience if you know how to prepare.
At Fingercheck, we want to ensure every small business is ready for 2024’s leap year – find out what you need to know below!
What is leap year payroll?
In a leap year, the extra pay period arises due to the extension of February from 28 to 29 days. At the same time, this may pose challenges for businesses paying employees weekly or biweekly.
While the standard year isn’t exactly 52 weeks, and outside leap years, at least one day will occur 53 times instead of 52. In a leap year like 2024, two days occur 53 times: Monday and Tuesday.
Companies paying employees on these days weekly or biweekly will experience an extra pay period.
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The leap year impact on different pay frequencies
While not every pay schedule is significantly affected by leap years, here’s how they work:
Okay, so with a weekly pay schedule, it’s pretty straightforward. You get your paycheck on the same day every week, and that happens 52 times in a regular year. Most of the time, not even a leap year messes with your payday or routine.
But here’s the interesting twist: If the year kicks off on a Thursday—or a Wednesday during a leap year—you’re looking at 53 full weeks instead of the usual 52. That means, for folks paid weekly, you get an extra payday. To determine the weekly gross pay for salaried employees during these particular years, divide their annual salary by 53. Easy math, right?
Now, for those on a biweekly schedule, you’re used to getting paid every two weeks—26 paydays in a regular year. But leap years throw in a bonus round, giving you 27 paydays. This goes for both hourly and salaried employees.
So, to find the biweekly gross pay for salaried employees during leap years, divide their annual salary by 27. It’s that simple.
Semimonthly pay schedules mean you get paychecks twice a month on specific dates. Here’s the catch: Payday falls on the same date each month, not necessarily the same weekday. Let’s take August 2023 as an example. You’ll get your checks on Tuesday and Wednesday if you’re paid on the 15th and 30th.
Even though semimonthly employees always get 24 paychecks a year, a leap year can mess with the exact payday in February. In 2024, if your payday is set for the 15th and the last day of each month, the last payday in February jumps to Thursday, Feb. 29, instead of Wednesday, Feb. 28.
Now, for our monthly workers, it’s as simple as it sounds. You get your checks once a month, usually on the same day. Leap years throw a curveball here.
But if your payday falls on the last day of the month, well, in 2024, that’s Feb. 29. A little extra something for our monthly crew!
Easy steps to prepare your SMB for leap year payroll
#1 Inform employees:
Use a solution like a self-service HR software to inform employees about changes to pay periods during leap years.
#2 Plan for the extra pay period:
Ensure your business is prepared for an additional pay period by adjusting annual budgets and processing deductions as usual.
#3 Check your payroll processes:
Review your payroll processes and settings to ensure they accurately handle leap years. Make any necessary adjustments to maintain compliance.
Get ready for your 2024 leap year payroll
#4 Ensure compliance:
Verify that payroll taxes are withheld correctly for the additional pay period and leverage tools to generate relevant reports for audits or annual requirements.
#5 Maintain accurate records:
Emphasize the importance of keeping accurate records during leap years to avoid compliance gaps and missteps during potential audits.
#6 Verify pay dates:
Encourage businesses to review pay periods for the upcoming year, providing flexibility in adjusting pay dates affected by leap years.
We get it; this is quite a bit to digest. Even if you’re not using Fingercheck right now, we’re here to help you make sense of leap year payroll and ensure smooth compliance in 2024. If you’re curious how our all-in-one platform can assist your business, why not schedule a call with one of our experts? They’ll walk you through it and give you a better feel for what Fingercheck can do for you.