3 THINGS TO KEEP IN MIND FOR LEAP YEAR PAYROLL

You might not think adding an extra day to the calendar in 2020 would be much of a big deal … until you consider the payroll implications.

Depending on when employees in your organization get paid, there may be an extra pay period or paycheck in 2020.

Even in non-leap years, if employees get paid weekly or every other week, there are usually additional paydays. But a leap year can compound those days.

Quick calendar lesson: In a 365-day year, six days happen 52 times, and one day happens 53 times. (For instance, in 2019, there were 53 Tuesdays.) In a leap year, there are two days that happen 53 times. (In 2020, those two days will be Wednesdays and Thursdays.)

So, if your organization’s payday is on Wednesday, Jan. 1, 2020, or Thursday, Jan. 2, 2020, you may need to make adjustments.

What are your options when it comes to paying employees? You could:

• Pay the same amount as you usually do for each payday, realizing there will be one extra paycheck in 2020. This is the most common option. But make sure to let your employees know about the one-time extra pay so they don’t think it’s a raise and expect the same amount next year.
• Divvy up everyone’s salaries into 53 or 27 paydays, which will mean smaller checks but an extra one at the end of the year.
• Switch from paying employees every two weeks to twice a month, taking into consideration you’ll need to also adjust benefit deductions. This option isn’t recommended for most businesses.

Regardless of which option you choose, make sure you also:

1. Let employees know about the changes so that it doesn’t hurt morale.
2. Program your payroll systems to recognize Feb. 29 as an actual day.
3. Take into consideration how payroll deductions — like retirement or health savings plans — will be affected and make sure employees understand those impacts.