We have a longstanding
policy of paying employees on the 5th and the 20th of each month. For
accounting reasons, however, we are considering changing our paydays. Can we do
this?
– Lloyd P. in
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The short answer is yes—no
state or federal laws prohibit employers from changing their employees’
paydays. Be sure to give employees advance notice of the change, and keep these
points in mind:
1. Regular paydays. With a few exceptions,
all wages are due and payable twice during each calendar month, on days
designated in advance by the employer as regular paydays. Work performed
between the first and 15th days (inclusive) of any calendar month shall be paid
for between the 16th and the 26th day of that month. And work performed between
the 16th and the last day (inclusive) of a calendar month must be paid for
between the first and 10th day of the following month. Note, however, that when
employees are covered by a collective bargaining agreement that sets out
different pay arrangements, those arrangements will apply. There are special
payday exceptions for exempt employees (see below), commissioned employees of
motor vehicle dealers, certain household and agricultural workers who receive
room and board, and workers employed by farm labor contractors.
2. Weekly, biweekly, or
semi-monthly pay. If you pay employees weekly, biweekly, or semi-monthly, you will
be in compliance with the payday rules, as long as the wages are paid within seven
calendar days following the close of each payroll period.
3. Overtime rules. Employers must pay
overtime wages no later than the payday for the next regular payroll period
following the payroll period in which the overtime wages were earned.
4. Exempt employees. The salaries of
employees who qualify for the executive, administrative, or professional overtime
exemptions may be paid once a month, on or before the 26th day of the month
during which the labor was performed, if the entire month’s salaries, including
the unearned portion between the date of payment and the last day of the month,
are paid at that time.
5. Payday notice. Employers must post a
payday notice specifying their regular paydays and the time and place of
payment. The notice must be posted conspicuously at the workplace, if feasible,
or where it can be seen as employees come or go to their places of work, or at
the office or nearest agency for payment kept by the employer. If you’re
changing the paydays, don’t forget to change this notice. You can download a
payday notice from the labor commissioner’s website at www.dir.ca.gov/dlse/PaydayNotice.pdf.
6. Private agreements. The labor commissioner takes the position that, while an employer may
pay wages more frequently than required by the above rules, California law
prohibits any private agreement (whether written or oral) that provides for
less frequent payment. A collective bargaining agreement is the only exception.