Leap Year May Cause Extra Paydays

A leap year is a calendar year that contains an additional day compared to a common year. The 366th day is added to February, resulting in 29 days for that month instead of 28.

In a typical year, most organizations operate on a biweekly or semimonthly payroll schedule, issuing payments every two weeks or twice a month, respectively. However, with an additional day in a leap year, these regular cycles can result in an extra payday, unsettling the established rhythm of payroll processing. This occurrence can affect budgeting, financial forecasting, and cash flow management for businesses, necessitating careful attention and planning.

The potential for an extra pay cycle is also possible during a regular year because one day of the week will occur 53 times (52 weeks x 7 days/week = 364 days). For example, in 2023 some weekly and biweekly payers with a Sunday payday faced the potential for managing an additional payday.

In a leap year, because there are 366 days, two days of the week will occur 53 times. This makes an additional pay cycle more likely. A central concern for employers facing a potential additional payday is whether to recompute weekly or biweekly paychecks for salaried employees who earn a certain amount annually.

For the 2024 leap year, there will be 53 Mondays and 53 Tuesdays. So, if an employer pays its employees on a weekly basis with either a Monday or Tuesday payday, the employer will need to make a decision on recomputing paychecks.

For example, a salaried employee who is exempt from the Fair Labor Standards Act (FLSA) earns $52,000 annually and is paid each Tuesday. Unless the employer recomputes the employee’s salary, the worker will be paid an additional $1,000 in 2024. To resolve this, the employer could reduce the employee’s weekly pay to $981.13 so that the total annual salary will be $52,000 in 2024.

However, employers should make sure there is no contract guaranteeing a certain amount of pay each pay cycle and that the employee’s pay is not reduced below the minimum required by federal or state laws. On the other hand, hourly employees who are not exempt from the FLSA, must be paid their agreed-upon hourly wage for all hours worked, regardless of any extra pay cycles.

Since paydays typically occur on Fridays, this may not be a concern for many employers in 2024. But, in 2027, there will be 53 Fridays, so employers with weekly pay cycles should plan ahead to ensure employees are paid accurately.