1

Changing Pay Frequencies

GERARD M. HALL, CPP | PAYROLL TECHNICAL OPERATIONS MANAGER, CBIZ

1

Purpose

• To provide attendees with the knowledge and ability to

change a business’s payment frequency when a change

needs to be made

2

Agenda

• Why Consider the Change?

• Compliance Items to consider

• Deductions/fringes to consider

• Developing Communication Plan

• Questions?

3

2

Quick Housekeeping Rules

• Active Participation is Appreciated

• Respect other people’s opinions/thoughts

• Don’t wait to ask questions; Ask Away

4

Your boss tells you that the

company is about to

change the pay frequency.

What’s your reaction?

5

Common Pay Frequencies

6

3

Pay Frequency Spread

7

8

Why Change?

• Better Financial Planning

• For Consistency

• Handling Employee Changes

• Comply with State Laws

9

4

A Few Things to Consider

• You cannot…

– Repeatedly change a pay frequency

– Change a frequency to avoid paying overtime or

delaying wages

• You can…

– Have multiple pay frequencies per the company

– Keep your workweek the same in a pay frequency

change

1

0

Compliance Items to Consider

11

Compliance Items: State Requirements

• FLSA does not govern pay frequency; governed by the

state

• States define Minimum Pay Frequency as well as lag

time

– Could cause DOL penalties if not paid timely

1

2

5

State Pay Frequency Laws

1

3

What’s the VA Law?

• VA: Nonexempt employees must be paid at least

semimonthly unless paid at least 150% of average

weekly wage ($1261.50), then can be paid monthly

1

4

In the news….

1

5

6

Compliance Items

• Total wages paid each pay period still falls under record

retention requirement

• If workweek changes, consider the past records of

former workweek (wages/hours/overtime)

1

6

Payroll Changes to Consider

17

The Calendar

• Adjust future pay periods to match new frequency

• May have to have create an interim period to transition

frequencies

– Consider tax frequency if short period

1

8

7

Rates/Salaries

• Salary pays need to reflect new frequency; Hourly

employees should need no adjustments

• Default Hours may need to be adjusted

– Hours for a 40/week employee

• Weekly = 40

• Biweekly = 80

• Semimonthly = 86.67

• Monthly = 173.34

– Otherwise take (typical hours by week * 52) / # of

pays1

9

Taxes

• Pay frequency should be set to apply to the appropriate

table for tax withholding

• May need to fill out new W-4 for those with “additional

amounts” in Box 6

2

0

Fringe Benefits/Deductions

• Per-Pay amounts may need to be reconfigured

– Insurance deductions

– Child Support/Garnishments

– Allowance amounts

– Group Term Life

– Union Fringes/deductions

• Consider accrual policies if “per-pay” based

• Flat direct deposit amounts should be considered

2

1

8

Developing the Communication Plan

22

Establish the “Project Team”

• Create the team responsible for the change

– Should consist of HR, Regulatory person, senior

leader, and trainer; could consider an employee

• Investigate the details and legal ramifications of the

change

• Set the date of the effective change

2

3

Consider Additional Changes

• Will an interim/short pay period be needed to transition?

• Will you be changing from current to arrears/vice versa?

• Will the workweek be changing? (Overtime purposes)

– If so, do you have calculations/software in place to

handle it correctly

2

4

9

Communicate and Educate

• Inform affected staff sooner than later

– Preferred timeline: at least 60 days prior to the change

• Hold Q/A sessions or office hours for employees to ask questions

• Show empathy; be prepared to handle difficult situations

• Integrate new change in HR documents of new employees/staffing changes

2

5

Time to implement and integrate

• Implement and adjust system/software for new pay

frequency

• Test paychecks to ensure deductions and taxes are

calculating correctly

• Phase out all prior documentation

• Be prepared to answer questions from staff

2

6

Let’s take a look at a communication plan

• College changed frequency from semimonthly to

biweekly 1/1/2018

• Began process June of 2017

2

7

10

2

8

Sample Payroll Conversion Timeline

May –

o Present Payout Options to Presidents Cabinet

o Establish Team involved in rolling out the process

June –

o Meet to establish roles on the project

o Draft Initial Documentation – 1st Draft 6/12 ; Finalized by 6/19

Employee Notification of the conversion

Conversion Timeline

FAQ

Employee Power point presentation

Paycheck/Cycle Schedule

Supervisor Notification Letter with backup FAQ

o Schedule Initial Onsite Meetings for Employees

o Follow up Meeting on 6/19 to review all established documentation

o Present Timeline to Presidents Cabinet 6/27

o 6/29 Website Go Live with

FAQ

Paycheck/Cycle Dates

Benefit Deduction Dates

Vacation Cash Out options

Upcoming Dates (Onsite Meetings)

Team List with Contact Info

Resource Links – Include Paycheck Calculator

Sample Comparison Paycheck Breakdowns at select Increments

$12.00, $13.50, $15.00, $16.50, $18.00, $19.50

o 6/29 Send out: All-Employee Notification of the conversion

July

o 7/5 Email all employees affected by the change and their supervisors with onsite dates

o Onsite Meetings Presented by Payroll w/ HR team member for potential HR questions

o Update FAQ with Questions received during Onsite meetings

o Employment will begin notification to selected candidates of the pay cycle changes

o Onboarding will incorporate a slide discussing the pending pay cycle change.

o End of Month - Updated Salary/Rate of Pay Letters for all Non-Exempt Employees

August

o Follow-Up Email for employees detailing progress.

How many employee’s we’ve met with

Upcoming Meetings or events

Changes to the Webpage

o Payroll Open Hours on Campus – Week of August 21st – LOC TBD

Payroll Member will be working at a designated location for the duration of the

day at each campus. This would be posted and allow for employees to meet one

on one to discuss their specific situation and provide sample paycheck amounts

based on their working hours/contributions/etc.

o Payroll will begin maintaining a log of employee elections for the Transition Assistance

Program

Employee notifications will begin the last week of September to warn of low

leave balances if they’ve elected the Vacation Cash Out

September

o Payroll Open Hours on Campus – week of September 5th – LOC TBD

o Payroll Open Hours on Campus – week of September 18th – LOC TBD

October

o Payroll Open Hours on Campus –week of October 2nd– LOC TBD

o Table at Benefit Fair (week of October 16)

Copies of FAQ

Paycheck Dates

Computers Available to do custom Sample Checks

Opt In/Out Forms

o Follow-Up Emails sent to Employees to confirm receipt or non-receipt of their Opt

In/Out form – to include supervisor

November

o Cash Out - Opt In/Out Forms due November 1st 4:00pm

o Payroll Open Hours on Campus –week of November 1st– LOC TBD

o Payroll Begins Cross checking employee elections

Leave Balances

Comp Logs

o Payroll Open Hours on Campus –week of November 20th– LOC TBD

December

o First Benefit Deduction at the new 26 deductions on Dec. 31

o Last Paycheck in Former System

o Payroll Runs the December Accrual – Dec 19

o Payroll removes the Vacation allotment from the employee balances for Jan 1

Balances used to load in Workday through EIB

January

o Compensatory Time Logs due to payroll on January 5, 2018

o Timesheets due for payroll on January 8, 2018

o Payroll uses EIB to load Cash Out - January 9, 2018

Two EIBS – Vacation/Comp

o January 12, 2018 – First biweekly paycheck.

o January 15, 2018 – second workweek timesheet due

o January 22, 2018 – third workweek timesheet due

o January 26, 2018 – first full bi-weekly paycheck

Biweekly Pay Cycle Conversion Frequently Asked Questions

Beginning January 1, 2018; all Hourly and Non-exempt employees that are paid on a current semi-

monthly basis will transition to a biweekly, one-week lag (actual) pay cycle. Simply put, each of the

affected employees will be paid for the actual time they’ve worked, rather than being paid for days yet

to be worked. Recognized as a best practice at colleges and businesses across the country, the biweekly

pay cycle will enable the College to decrease payroll errors, provide more accurate and timely reporting

of employee benefits, and ensure a more efficient payroll process. Here’s what you need to know about

the transition:

1. What are the advantages of a biweekly pay cycle?

Systematic approach to Payroll Time Reporting

Standardize payroll cycles across the college

More efficient and effective time reporting

Fewer manual adjustments

You will now be paid every other week rather than waiting a semi-monthly period between

checks.

Any overtime hours you work in the pay period will be paid during the period they are worked.

Your vacation and sick-leave balances will be current.

2. When will the change from a semi-monthly pay schedule to a biweekly pay schedule take effect?

If you are being converted to the biweekly pay schedule you will receive your last semi-monthly

paycheck on December 29, 2017. This check will include earnings for the pay period of

December 16, 2017- December 31, 2017.

Your first biweekly pay check will be on January 12, 2018. This check will include the earnings for

the pay period of

o January 1, 2018 – January 5, 2018.

Your first full biweekly paycheck will be on January 26, 2018. This check will include the earnings

for the pay period of

o January 6, 2018 – January 19, 2018.

3. How was my pay processed before this transition?

Presently, all full-time college employees are paid current. That is, a paycheck issued on May 15, 2017

covers the period of May 1 through May 15. A current pay cycle means that an employee’s time and

attendance is submitted prior to actually working the entire time period. As a result, if an employee is

sick or takes an unplanned absence, he or she will later have to submit an adjustment or a time-off

request to update his or her vacation or sick balance. The result is a costly, time consuming, and

sometimes inaccurate payroll and time and attendance process. When the adjustments are not done in

a timely manner, they could result in an overpayment of wages. This in turn results in tax implications

for both the employee and the college.

4. Can I choose not to go to the biweekly pay schedule?

No. All hourly and non-exempt employees will be converted to the biweekly pay schedule on January 1,

2018.

5. I’m paid semi-monthly. Will I convert to the biweekly pay schedule?

Not all employees will convert to the biweekly pay schedule; only employees whose positions are hourly

or are considered non-exempt under the Fair Labor Standards Act (FLSA) will convert to biweekly.

Employees whose job titles are exempt will remain semi-monthly.

6. Will I lose a paycheck?

No, this transition will not result in a reduction of salary. It is simply a 1-week deferment of the actual

time worked and reported.

7. What do “Non-exempt” and “Exempt” mean?

Non-exempt employees are eligible for overtime under the Fair Labor Standards Act (FLSA) and must

record time worked. Exempt employees are excluded from overtime, except for those situations

outlined in the Salary Schedule. If you are unsure of your exemption status, please refer to the Salary

Schedule or check with Classification and Compensation in Human Resources for assistance.

8. Why are “Exempt” employees remaining semi-monthly?

Exempt employees receive a predetermined salary each pay period regardless of the amount of time

worked in that period. Also, exempt employees are not eligible for overtime, except for those situations

outlined in the Salary Schedule. Exempt employees are only required to report non-productive time

such as vacation or sick-time usage.

9. Why must “Non-exempt” employees report time?

FLSA regulations require employees to track their time worked by the hour and require that overtime be

paid for work in excess of 40 hours in a workweek. To ensure that the College meets these regulations,

non-exempt employees must report time worked each day. The biweekly pay cycle was specifically

designed to help track hours worked and overtime.

10: Do all my hours have to be entered in a Timesheet to be paid?

Yes. Once on the biweekly payroll, you will be on “positive pay”, meaning there must be hours entered

in order to generate a paycheck. Employee Timesheet entry is due Monday by close of business for the

previous week.

11. I’m currently paid on the 15th and Last of the month. What will my payday change to?

As a biweekly employee, you will receive your earnings every other Friday. The first pay date of the

biweekly schedule will be January 12, 2018. Please refer to the Payroll Calendar (PDF) for a complete list

of the pay dates for 2018.

12. I know that there are 24 semi-monthly pay periods in a calendar year. How many biweekly pay

periods are in a calendar year?

A biweekly pay cycle consists of 14 days, beginning on Saturday and ending on the second Friday of the

pay period. You are paid every two weeks, giving you a total 26 biweekly pay periods in a calendar year.

13. Will my biweekly check be one-half of my monthly check?

No. You will get two biweekly checks per month with the exception of two months per year when you

will get three checks. Your take home pay for a biweekly period will be a little less than it was on a semi-

monthly schedule; however, you will receive the same annual salary contingent that all of your

scheduled hours are worked.

14. Will the change in pay frequency affect my sick and vacation accruals?

No, you will still accrue your time as of the 1st of the month following the month in which it was accrued.

You must be in paid status for a total of 11 working days per month in order to receive your accrual.

For example: If you are in paid status for at least 11 days within the month of January, you will receive

one full day on the first of February.

15. How is my hourly rate determined?

Take your annual salary and divide it by 2080, the number of working -hours in a year. If you are a 35

hour employee, you would divide it by 1820.

For example, your annual salary is $28,000.00 per year:

$28,000.00 ÷ 2080 = $13.46 per hour

16. I usually receive payment for my overtime hours 1-2 pay periods after I work them, when will I be

paid?

A: Any overtime wages owed to an employee in addition to their normal pay will be paid on the regular

check for the pay period in which the monies are earned.

17. What should I do to prepare for the conversion to biweekly pay?

We encourage you to review your personal budget situation and determine your income needs based

on a biweekly pay schedule.

Please note that your last December check on December 29, 2017 will contain your last semi-monthly

period of earnings and your next paycheck will be on January 12, 2018 which will only contain 5 possible

days of earnings. In preparation for the conversion, you may want to:

Review your current tax withholdings elections to make any necessary changes. Pay particular

attention to additional tax withholding amounts. See question 25 for more details.

Request that creditors adjust your automatic withdrawal or bill pay dates to align with your new

pay schedule.

Consider the opting into the Transition Assistance Program. See questions 18-22 for more

details.

Review any automatic bank drafts or loan payment schedules set up with your bank.

Review your current budget to determine the impact of the pay frequency schedule.

Review any payment schedules for mortgage payments, utility bills, installment loans, child

support orders, etc. to insure that the change in pay dates does not result in late payments.

As always, please be sure to review your paycheck for accuracy.

18. What are the Transition Assistance Program options?

To assist employees through the biweekly transition, we are offering two options:

Vacation cash-out: We are offering an opportunity for employees to cash out 5 Days of accrued

vacation leave.

Compensatory Time cash-out: We are offering an opportunity for employees to accrue and carry

up to 5 days(40hrs/35hrs) of Compensatory time beyond our standard timeframe limit of 30

days for the sole purpose of bridging the transition to the new pay frequency.

For more information on these options and how to apply, refer to the Transition Assistance Program

information on the Biweekly Payroll conversion website.

19. I need some financial assistance to help through the transition. Can I apply for both the Vacation

Cash Out and a Compensatory Time Cash Out?

No, you can elect one option.

20. Do I have to pay back the Vacation Cash Out?

No, you do not have to pay the company back.

21. When will my hours be deducted from my leave balances if I choose use my vacation hours for the

gap payment?

The hours will be deducted after the completion of the December 31, 2017 payroll before the

conversion, so you must maintain your hours leading up to the conversion in order to be paid for them.

This will include the accrual that an employee would be eligible to receive on January 1, 2018.

22. How can I calculate my Vacation Cash Out amount?

You can estimate your amount by calculating 40 x hourly rate as calculated in Question 15.

23. How can I calculate my Compensatory Time Cash Out amount?

You can estimate your amount by calculating your hourly rate x Total number of Compensatory hours up

to 5 days. See Question 15 for assistant with your hourly rate.

24. Will I need to make any changes to my direct deposit?

No. If you currently have your earnings sent to direct deposit, you do not have to make a change. If you

have automatic bill pay from your account, you may want to talk to your financial institution about any

necessary changes. Please review any secondary direct deposit accounts to confirm that you will have

the appropriate amount deposited.

25. Will this impact when I see the deposit into my bank account?

Yes. Those who are set up with direct deposit will have their pay deposited according to the new pay

schedule. See the attached Pay Schedule PDF.

26. What if I pay some of my bills through the automatic bill pay?

If you have automatic bill pay set up for any regular expenses, for example mortgage payments, student-

loan payments or car payments, we encourage you to work directly with your financial institution(s) to

change payment dates as needed.

27. Will I see benefit deductions on the December 29, 2017 paycheck?

Yes. Because deductions are taken in arrears (ex. December 29th deductions pay for January benefits

coverage), the December 15, 2017 pay check would be the last deduction of the 2017 plan year. The first

deduction of the 2018 plan year will be seen on your December 29th, 2017.

28. Is there a schedule that shows the benefit deductions?

Yes. You can refer to the Biweekly Benefit Deduction Schedule for a complete list of the benefit

deduction paydays.

If you are being converted to the biweekly pay schedule, your last semi-monthly paycheck on

December 29, 2017 will have your first deduction for your January 2018 coverage.

Your first biweekly pay check on January 12, 2018 will have the second half of your deduction

for January 2018 coverage.

Your second biweekly pay check on January 26, 2018 will have the first half of your deduction

for February 2018 coverage.

29. When is my retirement deduction taken?

The Retirement System mandatory retirement contributions are taken each biweekly payday.

30. I have a garnishment deduction. How will the transition to biweekly pay affect the amount

deducted for my garnishment?

If the garnishment deduction is calculated as a percentage of your earnings, a deduction will occur each

pay period, up to the maximum deduction allowed, and based upon federal and state regulations. For

example, a garnishment deduction of 25% will be taken each pay day.

If the garnishment deduction is a fixed flat-dollar amount, the amount is recalculated to a biweekly

amount. That calculation is multiplied out by a year and then divided by the total number of paychecks

within the year. For example, if you have a semi-monthly $250.00 garnishment payment, it will look as

follows:

$250 x 24 semi-monthly payments = $6,000 yearly payments. $6,000 / 26 pay checks = $230.77 biweekly

31. I contribute to my 403(b) plan. When will my contributions be taken?

If your contributions are set up as a percentage deduction, the percentage amount will be taken each

pay day.

If your contributions are set up as a fixed flat-dollar amount, you will need to complete a new 403(b)

contribution form for the 2018 plan year.

32. How does the change in pay frequency affect my Federal taxes?

We will continue to tax you according to the Federal W-4 form you currently have on file. Your biweekly

earnings will be taxed based upon the biweekly tax schedule set by the Internal Revenue Service. You

can review the tax schedules on the following link: www.irs.gov

33. Will I need to make any changes to my taxes or withholdings?

If you have an additional tax amount deducted from your paycheck, that monthly amount will be

calculated out to a yearly amount and then divided by 26 for a biweekly amount. If you do not want the

current additional amount to be split in this manner, please submit a new W-4 Form to the Office of

Human Resources prior to January 1, 2018.

Changes to your tax withholdings are likely not necessary, unless you determine it would be appropriate

given your specific situation. However, you may change your W-4 withholding at any time. Biweekly tax

withholdings will continue to be based upon IRS guidelines. The IRS Publication 15 (Circular E)

Employer’s Tax Guide can be accessed at www.irs.gov . You might also consider increasing your

retirement plan or FSA contributions, thereby reducing your taxable income. Contact a member of the

benefits team or by calling Human Resources to discuss your benefit questions.

34. Should I consult a tax advisor?

If you are uncertain about the impact of this additional paycheck and related deductions on your tax

situation, please consult your personal tax advisor.

35. Will there be ongoing communication?

Yes. Ongoing communication will be shared with affected staff and their supervisors regarding the

transition. Information will also be distributed to departmental HR/Payroll Contacts and information

sessions will be offered for staff.

36. If I have additional questions, who do I speak with?

Pay, tax deductions, or accruals questions should be directed to a member of the Payroll team, while

benefit deductions or coverage questions should be directed to a member of the Benefits team. Both

teams can be reached via email.