Pay Period

What Is a Pay Period?

A pay period is the recurring interval of time for which an employer calculates and pays employee wages. It defines the specific window of work that each paycheck covers—for example, all hours worked from the 1st through the 15th of the month.

In California, employers have flexibility in choosing pay period lengths, but strict rules govern when employees must actually receive their wages. Understanding pay periods is essential for proper scheduling, time tracking, and labor law compliance.

Common Pay Period Types

Weekly

• Length: 7 days (52 pay periods per year)
• Best for: Hourly workers who need frequent cash flow
• Pros: Easier overtime calculation; employees paid more frequently
• Cons: Higher administrative costs; more payroll processing

Bi-Weekly

• Length: 14 days (26 pay periods per year)
• Best for: Mixed workforces with hourly and salaried employees
• Pros: Balanced frequency; aligns well with weekly schedules
• Cons: Some months have three paydays, complicating budgeting

Semi-Monthly

• Length: Twice per month, typically 1st-15th and 16th-end (24 pay periods per year)
• Best for: Salaried employees; simplified monthly accounting
• Pros: Consistent two payments per month; easier budgeting
• Cons: Pay period lengths vary (13-16 days); overtime calculation more complex

Monthly

• Length: Full calendar month (12 pay periods per year)
• Best for: Executive or highly compensated employees only
• Cons: Restricted use under California law (see below)

California Pay Period Requirements

California Labor Code Section 204 establishes specific rules for pay periods and paydays:

Minimum Pay Frequency

Employee Type	Maximum Pay Period
Non-exempt (hourly)	Semi-monthly or more frequent
Exempt (salaried)	Monthly permitted
Farm laborers	Weekly (with some exceptions)
Temporary agencies	Weekly

Payday Deadlines

California requires wages to be paid within specific timeframes after the pay period ends:

• Wages earned 1st-15th: Must be paid by the 26th of the same month
• Wages earned 16th-end: Must be paid by the 10th of the following month
• Weekly pay periods: Within 7 calendar days after the pay period ends
• Overtime wages: May be paid by the next regular payday

Example: Semi-Monthly Pay Schedule

Pay Period	Work Dates	Payday (Latest)
First half	Jan 1-15	Jan 26
Second half	Jan 16-31	Feb 10
First half	Feb 1-15	Feb 26
Second half	Feb 16-28	Mar 10

Setting Up Pay Periods

When establishing pay periods for your California business, consider:

Alignment with Workweeks

• The "workweek" for overtime purposes is a fixed, recurring 7-day period
• Pay periods don't have to match workweeks, but misalignment complicates overtime tracking
• Define your workweek clearly in company policy

Scheduling Considerations

• Shift workers: Weekly pay periods may align better with rotating schedules
• Multiple locations: Standardize pay periods across locations when possible
• Payroll processing time: Allow sufficient time between pay period end and payday

Technology Integration

Ensure your time and attendance systems can:

• Track hours within defined pay period boundaries
• Calculate overtime correctly when pay periods span multiple workweeks
• Generate reports by pay period for payroll processing

Pay Period vs. Workweek

These terms are often confused but have different meanings:

Concept	Definition	Purpose
Pay Period	Time span covered by one paycheck	Payroll processing
Workweek	Fixed 7-day period	Overtime calculation

A bi-weekly pay period contains two workweeks, and overtime must be calculated separately for each workweek—not combined across the entire pay period.

Example

An employee works 45 hours in week one and 35 hours in week two of a bi-weekly pay period:

• Incorrect: Average to 40 hours/week, pay no overtime
• Correct: Pay 5 hours overtime for week one, regular time for week two

Pay Period Documentation

California employers must maintain records that clearly show:

• Pay period start and end dates
• Hours worked during each pay period
• Wages earned and paid
• All deductions made

The wage statement (pay stub) must include the inclusive dates of the pay period.

Changing Pay Periods

If you need to change your pay period structure:

1. Provide notice: Inform employees well in advance
2. Avoid gaps: Ensure no work time falls outside a pay period
3. Maintain compliance: Don't let the transition delay required payments
4. Update systems: Adjust time tracking, payroll, and scheduling software
5. Train managers: Ensure supervisors understand new timesheet deadlines

Common Pay Period Issues

Overtime Spanning Pay Periods

When an employee works overtime that crosses pay period boundaries:

• California daily overtime must be calculated regardless of pay period
• Weekly overtime is calculated per workweek, not per pay period
• Some employers pay overtime on the following paycheck; this is permitted if overtime wages are paid by the next regular payday

Reporting Time Pay

When employees report to work but are sent home early, reporting time pay is due within the same pay period and calculated at that period's rate.

Final Paychecks

Terminated employees must receive all wages immediately (involuntary termination) or within 72 hours (voluntary resignation with less than 72 hours notice)—regardless of the normal pay period schedule.

Best Practices

1. Choose wisely: Select a pay period that balances employee needs with administrative efficiency
2. Document clearly: Define pay periods in your employee handbook
3. Be consistent: Avoid changing pay periods frequently
4. Plan for holidays: Adjust payroll processing when paydays fall on bank holidays
5. Use technology: Automated time tracking ensures accurate pay period calculations