Legal Payroll Cycles

“I have been paying employees monthly but then I heard this may not be allowed. Why not?”

Your HR Survival Tip

California is very specific about when you pay employees. The penalties can be steep if you’re doing it wrong because there is often a fine based on each wrong check for each employee. For example, a late paycheck carries a basic fine of $100 per day per employee. In fact, in the past few years, California has also been very picky about what the wage statements (aka paystubs) have on them. Here are some basic rules about paychecks and paydays but, as usual, there may be exceptions to the following:

  • You must post the day, location (if employees pick up their checks), and time checks are available: this is found on your employment law poster and it must be on the Wage Theft Notice new hires receive.

  • If the payday falls on a weekend or holiday, you may choose to pay employees on the business day before or after but it must be the same each time.

  • The company is responsible for making sure the employee receives their paystub so you either need to forward the hard copy or confirm they actually have online access.

  • Paychecks must be available within 7 days from the end of the time worked. You cannot be later even for a holiday or weekend.

  • Standard semi-monthly (twice each month) payroll covering time worked the 1st through the 15th must be paid by the 26th of the month and time worked the 16th through the last day of the month must be paid no later than the 10th of the next month. If your semi-monthly work periods are different, you must pay within 7 days of your work period ending.

  • Most payrolls pay “in arrears” so timekeeping and payroll processing is easier. This means there is a gap between the time worked and the paycheck… usually at least 5 days. For example, a weekly or biweekly payroll is usually paid the Friday after the time worked.

  • Most salaried, exempt employees may be paid monthly but, if you do that, they must be paid by the 26th of the month and their pay must cover that whole month.

  • Hourly, non-exempt employees must be paid at least twice each month.

  • Temporary employees must be paid weekly.

  • If an employee is late submitting a timecard, you must still pay them based on the time they were scheduled to work. You reconcile and clean it up later.

Once your payroll processing schedule is set up properly, it’s not difficult to stay compliant. However, you still want to do periodic checks because technology doesn’t always work as we expect. Even if an employee agrees to a late paycheck, it’s not legal. You’re still at risk if you’re ever part of a lawsuit or EDD audit. Plus, the Labor Commissioner’s office is happy to help the employee at no charge.

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