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The upcoming leap year may impact your payroll schedule.
Every four years, February has 29 days instead of 28. This is a “leap year,” and it can throw a small bump in the road for your payroll schedule. How much a leap year will impact your payroll depends on the day of the week the 29th will fall on, and the frequency of your pay. For instance, if the 29th fell on a Monday, you might have an additional pay period during the year. If you are curious how leap year may impact your payroll schedule, read on for its effects on the four payment schedules and how you can prepare for a leap year.
Weekly Payroll
Under a weekly frequency, your employees receive wages each week. Weekly employees typically receive 52 paychecks per year, because there are 52 weeks in a year. Their pay period typically does not change in a leap year.
However, if the year is a leap year and starts on a Wednesday, as 2020 did, there will be 53 weeks in that year. This is important for any employees you have who get paid weekly and receive a salary. To get their weekly gross pay, you must then divide their annual salary by 53 instead of 52.
Biweekly Payroll
Biweekly employees are paid every other week and on the same day each period. Typically, they receive 26 paychecks per year. However, during a leap year, biweekly employees will receive 27 paychecks instead of 26.
If you pay a biweekly salaried employee during a leap year, you must divide their annual salary by 27 instead of 26. Leap year will only impact your payroll schedule for biweekly employees when February 29th falls on a particular day that affects your pay period and date.
Semimonthly Payroll
Semimonthly employees get paid twice per month on specific dates. This means that the day of the week may differ each time. Semimonthly employees get 24 paychecks per year, and although leap years don’t greatly impact your payroll schedule, it can throw off pay dates for February.
Monthly Payroll
These employees receive one paycheck per month, with a total of 12 paychecks per year. This payroll schedule is not affected by leap year, but if you pay on the last day of the month, make sure to make that February 29th instead of the 28th.
How to Prepare for Payroll in a Leap Year
- Know when a leap year is coming, and check your calendar at the start of the year
- Inform employees, especially if they are salaried
- Look at any payroll deductions and benefits that will be affected
- Make sure your payroll system is prepared for the extra day
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