Things to consider before changing “Pay Day”

Most employees can tell you exactly when payday occurs since they count on regular paydays to maintain their finances. When an employer decides to switch when the payday will occur, it might result in some backlash from the employees who count on getting paid on the old schedule.

The FLSA does not dictate payroll frequency or lag time between hours worked and the payday. This is governed by state law. Payroll-related changes can be disruptive to a workforce so careful handling is needed. Here are some considerations:

• The employer should examine the applicable state law in every state where employees are paid.
• The employer should be able to articulate a legitimate business purpose for the change.
• The change should not be for a temporary period of time.
• The change cannot be a subterfuge for avoiding the payment of minimum wage or overtime, in violation of the FLSA.

Remember that regardless of a payroll-related change, state laws often dictate shorter time periods for payroll in the event of a termination of employment.

Open and honest communication will help smooth the transition to the new schedule. Ensure that you follow applicable law when considering changing payroll dates.

If your company has changed its payroll schedule, what challenges did you face? How did the employees receive the news about the change?

Special thanks to Infinisource for the info!