Our payroll runs every two weeks right now for both salary and hourly employees. If we switch the payroll to semi-monthly is this allowed or legal especially for hourly employees? We handle payroll for our employees in several states–California, Florida, Illinois, New York, and Texas.
Depending on the precise type of workers involved (see below for more details), what you’re proposing to do is likely permissible, assuming you comply with all applicable minimum wage and overtime rules before, during, and after the changeover period.
You will also need to ensure the change does not violate any collective bargaining agreements or employment contracts you may have in place (e.g., a contract stating that a salaried employee will be paid X amount annually, with a check in the amount of Y issued every 2 weeks).
Here are the rules for paycheck frequency in the states you’re asking about; the specific cities you mention do not have any special paycheck frequency rules of their own:
Generally, employers must pay wages at least twice a month on paydays designated in advance. Wages earned between the 1st and the 15th of the month must be paid between the 16th and the 26th of the month; those earned between the 16th and the last day of the month must be paid between the 1st and the 10th of the following month (CA Lab. Code Sec. 204).
Florida has no payday law. Employers are free to set up pay schemes that best suit their business needs.
Illinois employers may establish semimonthly, biweekly, weekly, or daily pay periods for most employees (820 ILCS 115/3). For semimonthly or biweekly pay periods, wages must be paid no later than 13 days after the end of the pay period in which they were earned.
Employers must designate regular paydays in accordance with the following provisions (NY Labor Law Sec. 191). Most manual workers must be paid weekly, not more than 7 calendar days after the end of the week in which the wages were earned. According to the Department of Labor, Division of Labor Standards, “manual worker” means “a mechanic, a workingman or woman, or a laborer.”
Clerical and other workers must be paid at least semimonthly on regular paydays designated in advance by the employer. This requirement applies to executives, administrative, or professional employees earning $900 a week or less but not to those earning more than $900 per week.
There are special rules applying to railroad workers, salespeople, and tipped workers in NY; go here for more details.
Employers must pay most employees at least twice a month. The pay periods should be as equal in length as possible. Employers may pay exempt employees at least once a month. This category includes administrative, executive, and professional employees, including teachers in elementary or secondary schools and outside salespersons (TX Labor Code Sec. 61.011). Paydays must be designated in advance. If no payday is specified, paydays are on the 1st and 15th of each month.