-1

My company has just switched from bi-monthly pay to bi-weekly. The result is that for the first few months of this year, we are actually paid less than for later months in the year. I of course understand that over the full year that evens out and annual compensation is the same.

My question is this: what if an employee resigns in, for example April or May? Will they actually LOSE money because they have only been paid the lower salary amounts in these first months? Or are companies obligated to ‘make good’ when the employee leaves?

For example if someone makes 100k and a work year consists of 262 working days…then daily pay =$381.68.

  • If that person leaves after working just 84 days of the year, are they entitled to a total salary for those 84 days of $22.007.96?

  • Or are they only entitled to the pay checks that are due within those 84 days?

  • Is the company allowed to pay you less in some months than others, and then pocket the difference if you don’t work a full year? Or, do they have to pro-rate your annual salary for the partial year you have worked?

7
  • Everywhere I've had bi-monthly checks, the effective daily/hourly rate has depended on the number of days in the pay cycle, and your last check is pro-rated using that floating daily rate for the relevant pay period. It works both ways; you leave a small amount of money on the table if you leave on January 31, but get overpaid if you leave on February 28. The later in the year you leave, the more it averages out, so it's probably not worth the effort for the company to micromanage it.
    – chepner
    Commented Jan 15, 2022 at 20:52
  • 3
    Why are you paid less in the first few months? Is it just because there are fewer paydays in the first few months, so you are paid less in them? In other words, are you paid the same amount every bi-weekly pay period? Commented Jan 15, 2022 at 21:40
  • 1
    Semi-monthly, right? Bi-monthly means every 2 months, 6 times per year. Commented Jan 15, 2022 at 22:55
  • @JTP-ApologisetoMonica thefreedictionary.com/biannually Commented Jan 15, 2022 at 23:32
  • 3
    Bernhard - the world has gone mad and what I knew as facts are now whatever common usage wishes them to be. Thanks for that link. I suppose it’s ok to say that my head literally just exploded over this. Commented Jan 15, 2022 at 23:37

1 Answer 1

0

I have gone through a couple of these shifts: monthly to every two weeks; and one we shifted from being paid on the day the pay period ended to a system where we were paid a week after the pay period ended. Both caused lots of meetings, and emails, and complaints. But in the end nobody lost money. In both cases the company allowed people to get a little extra in the first check, and then docked their pay for the next x checks to pay back the loan. This was to ease them into the new system.

My company has just switched from bi-monthly pay to bi-weekly. The result is that for the first few months of this year, we are actually paid less than for later months in the year. I of course understand that over the full year that evens out and annual compensation is the same.

The big thing to know is if the original twice a month were essentially half a months pay twice a month; or if the checks varied in amount based on the number of work days in that part of the month?

I noticed that in your example you quote the pay as:

For example if someone makes 100k and a work year consists of 262 working days…then daily pay =$381.68.

That makes me think that you weren't being paid 1/2 a month twice a month. In the cases where both "halves" are equal, I would have expected you would have said $8333.33 a month.

If that person leaves after working just 84 days of the year, are they entitled to a total salary for those 84 days of $22.007.96?

They are entitled to 84 times the daily rate, assuming that they worked full days for those 84 days. Which is 84 * 381.68 or 32061.12.

Or are they only entitled to the pay checks that are due within those 84 days?

The actual pay is based on the days worked. The last check is probably paid after the last day of work, and might not be the same amount as the other checks if the last day of work doesn't match the end of the pay period.

Is the company allowed to pay you less in some months than others, and then pocket the difference if you don’t work a full year? Or, do they have to pro-rate your annual salary for the partial year you have worked?

When being paid every two weeks, but looking at it through a monthly lens you will have some months where you are paid 3 times, while other month will have two checks. This is because there are 26 or 27 checks in a calendar year when paid every two weeks. This is perfectly normal, but does take some time to get adjusted to.

I will make one big point if the old style was uniform pay twice a month. You will have a bigger adjustment going from uniform checks to uniform but smaller checks. That is the switch from 24 to 26 checks. Going from non-uniform check to uniform checks some people get used to very quickly.

One thing I realized: many of your questions regarding leaving would be the same under the old system. When you quit in the middle of the cycle the company has to determine how much your last check should be. They probably did the same thing with your first check when you started.

One of my kids is a school teacher, they are paid over the 12 months, but if they leave before the last day of school, they have in the employee handbook explaining how the last check is calculated. Your company should be providing this information to you. Then check their math.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .