Can I Pay My Employees Monthly?

by Mark J.
(California)

I am just starting a new business, and I was hoping to cut payroll processing costs by paying my employees monthly. Can I do that?

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Monthly Payroll Probably Won't Work
by: Best Business Payroll

Sorry, but there is a reason why monthly payrolls are so unusual.

First, they are incredibly unpopular with most workers because they don't like being paid so infrequently.

Second, and more importantly, they are not in compliance with most state labor laws. Some states (mostly in the mid-west and east coast)specify that non-exempt workers must be paid every 10 days and most states specify every 15 days. (Non-exempt employees are usually the hourly workers; exempt workers include owners or equity stakeholders, or salaried employees).

Most monthly payrolls are what they call Executive payrolls or Confidential payrolls. These are the pay runs of a few highly compensated top officers of an organization separated from the pay run of the rest of the employees in the organization.

Most salaried employees are still paid at least semi-monthly (although technically since they are exempt they could be paid monthly) because, as stated already, employees do not like being paid so infrequently. You may get significant pushback from these employees, which may make it worth your while to pay them more often than actually required by law.

You are allowed, however, have two separate pay frequencies: one for your non-exempt hourly workers and one for you and other company stakeholders.

In addition, you may want to consult our articles outlining the pros and cons of various pay cycles by going back to the FAQ page and looking under the Reader Questions area.

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