Definition of Semimonthly Payroll
Traditional paydays in the United States include weekly, biweekly, semimonthly and monthly. State law usually mandates employers to pay employees by at least one of those paydays. The state of Texas, for example, requires employers to pay nonexempt employees no less than semimonthly and exempt employees at least monthly. Processing a semimonthly payroll is not always as straightforward as a weekly or biweekly payroll.
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Identification
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A semimonthly payroll occurs twice per month. Generally, employers pay employees on the 15th and on the last day of the month. Unlike a weekly or biweekly payroll, which falls on the same day every payday, such as every Thursday or every other Friday, a semimonthly payday might fall on different days of the week. Further, a weekly pay period has seven days and a biweekly payroll has 14 days, but a semimonthly pay period has varying days because some months are shorter than others.
Salary Processing
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Processing payroll for a salaried employee on a semimonthly pay schedule is not complicated. Employers with large payrolls that include salaried and hourly employees might choose to pay salaried employees semimonthly and hourly employees weekly or biweekly. This is because salaried employees are normally exempt; they receive a set amount of pay for the pay period and are paid current. Most salaried employees are paid 2,080 hours for the year -- 40 hours per week for 52 weeks. To arrive at the hours per pay period, the employer divides the total hours for the year by the number of pay periods in the year for a semimonthly payroll -- 2,080 hours / 24 annual semimonthly pay periods = 86.67 hours.
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Hourly Processing
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Many employers do not pay hourly employees on a semimonthly basis because hourly employees are paid according to their work hours rather than a fixed amount like most salaried employees. To ensure enough time for payroll processing, hourly employees on a semimonthly payroll are usually paid lag -- which comes after the end of their pay period work time. Further, depending on the number of days in the month and the actual payday, hourly employees might be paid for a varying number of days each payday.
Considerations
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To cut down on confusion, employers with semimonthly payrolls usually give employees an annual payroll calendar, which shows time card submission dates and when paydays will occur. If the semimonthly payday falls on a weekend or holiday, the employer usually issues paychecks and makes direct deposits available on the preceding business day. A nonexempt employee qualifies for overtime pay; an exempt employee does not.
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