What we'll cover
- Pay schedule requirements for employers
- Identifying your company's pay periods
- Creating a pay schedule
- Schedule name and pay frequency
- Check date and pay period
- Pay frequency, pay periods, and which schedule is right for you
- More pay period examples
Pay schedule requirements for employers
Pay schedules determine how often you pay employees and/or contractors. Many states have pay schedule frequency requirements for employers, which can be dependent on the size of the company and the industry.
To check these requirements please visit the United States Department of Labor.
Identifying your company's pay periods
A pay period is simply a recurring length of time for which an employee could be paid. It also determines how frequently employees are paid. Most companies pay everyone at the same time, and so have just one pay period. Some companies have more than one pay period, such as a bi-weekly payroll every other Friday for some employees, and a monthly payroll on the 1st of each month for owners and/or managers. It is recommended that you have a separate pay schedule for each of your company’s pay periods.
Creating a pay schedule
In the dashboard, expand the "Next Scheduled Pay Run" tile, and click +Add New.
Schedule name and pay frequency
The simplest and most common approach to naming your schedule is to use the pay frequency as the name. The pay frequency determines how often your employees will be paid. A bi-weekly schedule could be named simply "Bi-Weekly". But if you pay different teams in your company with different frequencies, the name could be based on team, such as "Management", or "Floor Techs". Whatever you decide, keep it simple, and to make sure that you, and anyone running payroll for your company can easily pick the right schedule.
Check date and pay period
While your options will vary depending on your chosen pay frequency, you will always need to choose the first check date, the date that pay period begins, and the date when it ends. Remember that the last day of the period should be the day before the start of the next, not on the same day.
Note: Learn more about the differences of these pay periods in Pay periods defined.
Pay frequency, pay periods, and which schedule is right for you
Unless you're an experienced time traveler, it's easy to get turned around thinking about check dates, and their pay periods, so here's a few examples of how each pay frequency might be set up, including how to see them on a calendar.
For both weekly and bi-weekly pay frequency, choose the check date (first pay date), and the start and end dates for the period which that check represents.
Review your pay periods and important dates
Once you've entered this info, you'll see your pay schedule in the Pay Periods section on the right. It shows upcoming pay periods, check dates, and pay run deadlines for the next few months. This is a great way to make sure your schedule is just how you want it.
For a semi-monthly pay frequency, choose the check date (first pay date), and the start and end dates for the period that check represents. Then, set the start and end dates for the second period of each month.
Because every month is a little different, for this second period, you can choose a specific calendar day up to the 28th day of the month, or choose up to 5 days before the end of the month. It will apply to the current and all future months.
Be sure to check your schedule under "Pay Periods" to make sure it's exactly as you expect it.
What does "Previous Month End -5 Days" mean?
Whether you pay your employees weekly, bi-weekly, semi-monthly, or monthly, some of your pay periods may need to be a little flexible, and span different calendar days each month. One of the most complicated is semi-monthly. Because each month may be between 28 and 31 days long, it's not as simple as ending on "the 31st of every month". Below you see that the 2nd pay period is three days longer in March than in February.
Let's look at a few common bi-weekly pay schedules, and how they work. For these examples, our first check dates will be in the month of March.
Paid on the 15th and last day of each month (Salary)
Salary employees generally make the same amount each month, so payroll can be processed before the end of the pay period so that employees are paid right away.
- 1st period check date 3/15 for the week of 3/1-3/15
- 2nd period check date 3/31 for the week of 3/16-3/31
Paid on the 1st and 15th of each month (Salary)
You can also allow time between the end of the pay period and the check date.
- 1st period check date 3/1 for the week of 2/16-2/28
- 2nd period check date 3/15 for the week of 3/1-3/15
Paid the 5th and 20th of each month (hourly employees)
If you pay employees hourly, then you may need time between the end of the pay period and the check date to calculate and pay hours worked. This pay period might end a week or two before the check date.
- 1st period check date 3/5 for the week of 2/16-2/28
- 2nd period check date 3/20 for the week of 3/1-3/15
Paid the 15th and last day of each month (hourly employees)
- 1st period check date 3/15 for the week of 2/16-2/28
- 2nd period check date 3/31 for the week of 3/1-3/15
More pay period examples
Click on a pay period to learn more about it.
A weekly payroll schedule is for companies that pay on the same day each week. This pay schedule will result in 52 paydays each year. For example, here's a typical schedule where the check date is Friday of each week.
Pay period: Sunday to Saturday (it will always be 7 days)
Pay date: The following Friday (known as a one week hold). We always recommend a 5-day hold for employers with hourly employees as it allows time to collect, process, and run payroll without being rushed.
A bi-weekly payroll schedule is for companies that pay on the same day every other week. This pay schedule will result in 26 paydays a year. For example, here's a typical schedule where the check date is Friday of every other week.
Pay period: 1st Sunday to 1st Saturday plus the 2nd Sunday to 2nd Saturday (it will always be 14 days)
Pay date: The Friday after the 1st Saturday of the pay period
A semi-monthly pay schedule is for companies that want to pay on the same two days every month. This pay schedule will result in 24 paydays per year. The most common semi-monthly pay schedule results in paydays on either the 1st and 15th of a month or paydays on the 5th or 20th of a month. OnPay simply needs an example of the next two pay periods to produce the schedule.
Here's a typical example of paydays on the 5th and 20th:
First pay period: The 1st through the 15th (it will always be 15 days)
First pay date: The 20th
Second pay period: The 16th through the end of the month (it will vary in length by month)
Second pay date: The 5th of the following month
Note: As you can see the pay schedules vary based on the number of days in the month and can often cause a check date to fall on a weekend. If your check date falls on a weekend please keep in mind the employee will be paid on the nearest business day. For example, if the pay date is on a Sunday, the employee will see the funds on Monday. This can make a semi-monthly pay schedule more difficult for employers to process, especially with hourly associates.
A monthly pay schedule allows a company to pay on the same day every month. This pay schedule will result in 12 paydays per year. For example, here's a typical schedule where the check date is fifth of the following month.
First pay period: The 1st through the end of the month (it will vary in length by month)
Second pay date: The 5th of the following month
Many companies that have mainly salary employees making larger amounts, or companies where the owner is the only employee, choose to use a monthly schedule. It is simply not practical for most regular employees to be paid only once a month.
Make a mistake? No worries! You can edit any pay schedule you have already added. However, if you created more schedules than you need, or if you no longer need one of your pay schedules, then you can request removal of that schedule by sending an email to firstname.lastname@example.org.
Other great resources
- The quick guide to setting up payroll the first time
- Picking the perfect pay schedule for your business
- Basic payroll accounting: How to add paydays to your books
- Independent contractor vs. employee: Understanding employment classification