Checklist for Employers: Preparing for 27 Pay Dates in the Upcoming Calendar Year

Is this the first time you will be running a payroll with 27 pay dates? We’ve created a checklist for you!

• Review Your Payroll Calendar: Confirm that the upcoming year includes 27 pay periods instead of the usual 26 (for biweekly payroll schedules). Double-check the dates to avoid overlap or missed cycles.
• Adjust Salary Calculations: Determine if annual salaries will be divided by 27 instead of 26 for salaried, exempt employees to prevent overpayment, or if regular per-period pay will continue.
• Update Payroll Systems: Ensure payroll software and systems are configured to accommodate 27 pay periods, and test for accurate calculations and deductions.
• Review Any Employment Contracts: Examine employment contracts to check for language regarding pay periods and ensure compliance with contractual obligations.
• Assess Potential Impact on Budget and Cashflow: Connect with the finance department to address impacts on benefits, deductions, and budgeting. Assess and plan for the additional payroll cycle's impact on cash flow.
• Communicate with Accountants and Auditors: Ensure your accounting team is aware of the change for accurate reporting, audits, and year-end close-out procedures.
• Adjust Benefit Deductions: Review benefit deductions (such as health insurance, flexible spending account, retirement contributions, and wage garnishments) to determine if they need to be recalculated for the extra pay period. Or, if the deduction schedule needs to be modified.
• Inform Third-Party Vendors: Notify benefit providers, retirement plan administrators, and other relevant vendors of the change to prevent discrepancies.
• Update Employee Self-Service Portals: Revise portals and online materials to reflect the correct pay dates and deduction schedules for the year.
• Review Tax Withholdings: Check that federal, state, and local tax withholdings are correctly calculated based on 27 pay periods. Ensure withholding limits are set to be met on the correct date.
• Communicate with Employees: Inform employees about the change, how it will affect their paychecks, and address any questions or concerns they may have.
• Document All Changes: Keep clear records of all payroll and deduction changes made due to the additional pay period for compliance and future reference.
• Monitor and Evaluate: After implementation, monitor payroll runs for accuracy and address any issues promptly; evaluate the process for improvements in subsequent years.

While this checklist might not cover everything your organization needs to consider, it should provide you with a basis to develop a checklist that meets the needs of your organization.

If you have questions, contact us; we are just a call away.