You’ve just been hired for a new job, and your manager informs you that you’ll receive your income on a biweekly pay schedule. What does that mean? You’re accustomed to receiving your paycheck twice a month, so are they the same thing?
A biweekly pay schedule is one of four types of pay cycles — the other three are monthly, semimonthly, and weekly. If you’re new to working under a biweekly pay period, how does it compare to other cycles?
What is a Biweekly Pay Schedule?
Biweekly pay means you receive your paycheck every two weeks, most likely on Fridays. As such, your employer will process payroll a total of 26 times throughout the year (52/2).
Let’s say your new job pays the median income in the United States: $61,937 per year. $61,937 divided by 26 is $2,382.19, which is what you could expect your paycheck to be before taxes.
Whether they are mid to large companies with HR departments or small businesses that use payroll software, many employers choose to pay their employees with biweekly pay periods because it’s easier and cheaper for them to process payroll. There’s less opportunity for clerical errors that could affect how much you and your coworkers are paid, and you can rely on its consistency when managing your personal budget.
Biweekly Vs. Semimonthly Pay
Let’s address the difference between biweekly vs. semimonthly pay. As we’ve mentioned, biweekly pay periods are every two weeks, while semimonthly refers to twice per month. You can expect your paycheck on a consistent day of the week in the former schedule, but in the latter, payday is usually the first and 15th of every month, or the 15th and the last day. You have (mostly) reliable dates this way, but you’ll have to check your calendar for what day of the week payday falls on.
In semimonthly pay cycles, you receive your paycheck 24 times throughout the year (12/2). Returning to our previous example, if you make $61,937 annually, then your paychecks would be $2,582.2 before tax. This amount is slightly greater than it would be in a biweekly pay schedule, but you receive your compensation less frequently.
Biweekly Vs. Monthly Pay
As you can surmise, monthly pay cycles entail paychecks once per month. Your before-tax wages would be $5,161.42 per month if you make the median salary in the U.S., but you need to budget carefully because you have infrequent access to your income. This schedule is definitely the easiest for employers to manage, though it’s not optimal for employee satisfaction (it’s more common for contractor roles).
Biweekly Vs. Weekly Pay
As for the comparisons between weekly vs. biweekly pay, weekly periods pay their employees as many as four to five times per month. You have access to your money more often, but some employees prefer biweekly schedules because they budget better when larger sums of money hit their bank accounts every other week. Weekly payroll is also more difficult to process from your employer’s perspective, so it’s not the most common kind of pay cycle.
How Does Overtime Factor In?
The Fair Labor Standards Act dictates that employers need to pay hourly employees 1.5 times their regular rates for any hours worked over 40 in a given week (individual states may enforce other specifications).
A biweekly pay schedule is ideal for calculating and incorporating overtime work into payroll. It’s extra effort for HR accountants to add overtime to every employee’s paycheck each week, and it’s difficult to calculate overtime pay if payday falls on a different day of the week every month. Pay periods may also be different lengths due to weekends. Every other week eases the workload for accountants and makes it easy for them to consistently and accurately add your overtime hours to your paycheck.
What Should You Do If You Need Your Money Earlier?
Though having payday come every other week is pretty consistent and reliable, that doesn’t mean everything is grand if you’re living paycheck to paycheck. Say it’s Tuesday of the last week of the month, and your paycheck comes in on Friday. The 31st is on Thursday, though — which means that’s when your bills are due.
If you don’t have sufficient funds to cover everything, it doesn’t have to mean you’re out of luck. You can use Earnin to access your income for hours already worked — up to $500 per pay period1, i.e., the two-week span since your last paycheck. You now have $500 to cover your bills that are due Thursday and avoid late fees2.
You’re not in control of your pay schedule, so it’s important to know what it means for your personal budget, your access to your hard-earned money, and how it compares to other cycles when applying for new jobs.
EarnIn is a financial technology company, not a bank. Bank products are issued by Evolve Bank & Trust, Member FDIC. The EarnIn Card is issued pursuant to a license from Visa USA Inc.