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For most businesses, a biweekly pay schedule offers the best balance, reducing administrative costs by 43% compared to weekly pay, while on-demand pay solutions can bridge the gap for employee financial wellness.
Selecting a payroll schedule is a critical decision that impacts both your company's operational efficiency and your employees' financial health. The goal is to find an equilibrium between administrative burden and meeting staff expectations. According to the U.S. Bureau of Labor Statistics, the most common pay frequency is biweekly, used by 43% of businesses, followed by weekly (27%), semimonthly (19.8%), and monthly (10%). This analysis breaks down the key differences to help you determine the right fit.
A weekly pay structure means employees are paid 52 times per year. This high frequency can be a significant morale booster, as staff have regular access to their earnings. This is particularly aligned with hourly pay structures, where work hours and potential overtime can fluctuate week-to-week. Paying weekly ensures that overtime is compensated promptly, which can improve attendance and productivity. From an administrative perspective, a weekly schedule creates a consistent, repeating workflow, making it easier to remember deadlines for timecard submission and processing.
However, this frequency comes with considerable drawbacks for the business. The primary concern is cost. Each payroll run incurs expenses, whether through internal resource allocation or fees from a payroll vendor. These costs accumulate significantly over a year. Furthermore, the administrative burden is high, requiring more frequent processing of wage garnishments, paid time off, tax calculations, and other compensation-related adjustments, leaving less time for strategic HR duties.
A biweekly pay schedule, where employees are paid 26 times per year, is often more practical from an operational standpoint. The most immediate benefit is time savings. Processing payroll once every two weeks instead of every week halves the administrative workload, reducing the likelihood of errors and freeing up your payroll team for other tasks. It also simplifies reconciliation, as there are fewer outstanding checks to track at any given time, and distributing tax obligations over a longer period can minimize the risk of costly errors with the IRS.
From a cost perspective, biweekly pay is significantly less expensive. Vendor fees per run are reduced, and for companies that issue paper checks, costs for printing and postage are cut in half. The trade-off, however, is for employees. The longer wait between paychecks can be a source of financial stress for some, potentially affecting morale, especially for those living paycheck to paycheck.
Is there a way to achieve the cost savings of a biweekly schedule while providing employees with the financial flexibility of weekly pay? The answer lies in an On-Demand Pay benefit, also known as earned wage access. This modern solution allows employees to access a portion of their already-earned wages before the official payday, typically through a mobile app.
For employers, the payroll process remains unchanged; you run payroll on your regular biweekly (or semimonthly) schedule. The on-demand pay provider handles the advance payments, often with no additional administrative burden on your internal team. This means you maintain the cost and time savings of a less frequent payroll cycle while empowering your employees with greater control over their finances, which can be a powerful tool for improving employee satisfaction and retention.
Based on our assessment experience, the most effective strategy is to adopt a biweekly payroll schedule for its operational efficiency and to integrate an on-demand pay benefit to meet employee expectations for financial accessibility. This hybrid approach addresses the core needs of both the business and its workforce.
