The Fair Labor Standards Act, which sets the federal wage and hour laws, says employers must pay employee wages due in a prompt manner. Many states have minimum payday policies, which require an employer to pay employee no less than by the stated time frame. A semimonthly payroll is one of the traditional paydays that may fall into this requirement. Compared to a weekly or biweekly payroll, a semimonthly can be complex.
A semimonthly monthly happens twice per month -- typically, on the 15th and the last day. A biweekly payroll occurs every other week and usually includes a standard 80-hour workweek, particularly for salary employees. However, one semimonthly payroll for a certain month can include more days than the other payroll. For example, in March 2011, the first payroll for salary employees who are paid current, includes payment for 11 workdays from March 1 through March 15. The second payroll includes payment for 12 workdays from March 16 through March 31.
Salary employees have 2,080 work hours per calendar year, which includes paid benefit days, such as vacation and sick time. A semimonthly payroll has 24 pay periods for the year (twice per month x 12 months). This means that a salary employee receives payment for 86.67 hours each payday (2,080 / 24). To arrive at an employee’s salary per semimonthly payday, the employer divides her annual salary by 24 pay periods.
Hourly employee calculation for a semimonthly payroll is not as straightforward as a salary employee calculation. Hourly employees are paid according to hours worked during the pay period. Therefore, to allow enough time for payroll processing, the employer may set a deadline as to when hourly time cards should be submitted. This means that unlike salary employees who are paid current, hourly employees are paid lag. For example, for March 15, 2011 payday, the employee might be paid for time worked through the 10th. For March 31, 2011 payday, he might receive payment from March 11 (where the last payroll left off) through the 28th. This process varies by organization.
Due to the complexity in figuring time cards for hourly employees on a semimonthly payroll, many employers pay hourly employees weekly or biweekly. Some large corporations with both hourly and salary employees establish a biweekly for hourly employees and a semimonthly payroll for salary employees. When a semimonthly payroll falls on a holiday or weekend, employees with direct deposit generally receive payment on the preceding workday.