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In 2009, there are 27 bi-weekly paydays instead of 26, confirmed the Pennsylvania Labor and Employment Blog, which creates a compensation issue for salaried employees.
Bi-weekly pay programs pay employees in 14-day increments resulting in a 364 day annual pay cycle, but there are either 365 or 366 days in a year every five years or so necessitating a calendar year with 27 pay periods instead of the typical 26. According to the blog, employers approach this situation in two ways. Some employers adjust salaried employee bi-weekly compensation for the 27 pay period years by dividing their annual salary by 27 rather than 26 resulting in a lower pay for each pay period in the year. However, this approach can cause problems with automatic deductions. Other employers allow the extra paycheck and inflated compensation, not wanting to mess with the largely automated payroll system.
Legal issues can arise from reducing the bi-weekly salary amount. Paying salaried employees on a semi-monthly basis (twice a month) avoids the problem altogether, said the blog, but does not work well for hourly employees, however some employers do not want the expense of running two payrolls at the same time.
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