Heads Up: 2009 is Bringing You a Pay Period Leap Year!

As if HR professionals didn't have enough on their plate already, 2009 brings us one of those strange years with 27 bi-weekly paydays instead of 26 and it is time to begin planning how to deal.  Michael Moore of the Pennsylvania Labor & Employment Blog presents a well-written overview of the challenge employers face with the upcoming pay period leap year.

From Michael's post:

Bi-weekly pay programs pay employees in 14-day increments resulting in a 364 day annual pay cycle. Since there are either 365 or 366 days in a year, every 5 years or so, there is a calendar year with 27 pay periods instead of the typical 26.

The 27 pay periods for 2009 create a compensation issue for salaried employees. Bi-weekly pay is typically calculated by dividing annual salary by 26 and employees are accustomed to a payroll amount based on this division. Continuing this practice in 2009 will result in an "extra" paycheck in 2009, but the normal 26 pay periods will resume in 2010. Some commentators have characterized this as a "timing issue". It is not. There are never years with only 25 pay periods to offset the years with 27.

There doesn't appear to be a clear "ideal" solution to this issue; however, Michael outlines a few options along with their relative pluses and minuses.  Click over to his post and learn more. 

Already figured out how your organization is going to address the pay period leap year?  Then share a comment with your thoughts and experience.