Paying Late is a Red Flag

“I sometimes forget about the deadline to process payroll so paychecks may end up a few days late. Someone told me that’s a problem. Why?”

Not only do employees dislike late paychecks (no matter what they tell you) but California has a law against that practice. In addition, the law specifies exactly when employees must receive their money… and you can be fined if you’re not complying.

You are legally obligated to post a notice specifying the details of your regular paydays. When a holiday or weekend interferes with a regular payday, you can lawfully choose to pay employees either on the business day before the holiday or weekend or the first business day after. Whichever you choose, you must be consistent with that schedule and include that on the posted notice.

Compare your pay practices with the following:

  • Employees paid weekly must be paid within 7 days from the end of that work period. For example, if the company’s workweek is Monday through Sunday, time worked during that week must be paid no later than the next Sunday (7 days later).
  • Employees paid on a semi-monthly (twice monthly) basis are usually working the 1st through the 15th and the 16th through the end of the month. You must pay employees by the 26th (for 1st-15th) and by the 10th of the following month (for 16th-last day). There are different due dates for semi-monthly payrolls using different dates so confirm your deadlines if you aren’t using the normal semi-monthly dates.
  • Hourly employees must be paid at least twice per month.
  • Exempt, salaried employees must be paid at least monthly and paid within 7 days of the end of the month.
  • If an hourly employee fails to submit a timecard, you are still legally obligated to pay the employee on time. You base their pay on the employee’s regular schedule and then reconcile it and pay any overtime the next pay period.

If money is tight and you may not have sufficient funds in the bank for payroll, plan ahead and stop employees from working so you can still pay them in full. Lack of funds is not considered a good reason to issue late paychecks. When a paycheck is late, you will be liable for another day’s wages every day after that until the employee receives their pay. That’s an extra day on top of what they might be earning that day while still working for you.

In summary, you can’t move a payday for your convenience and you can’t delay paying employees because you didn’t budget properly. Both are illegal and can result in fines. Post your payday notice and stick with it. You expect employees to show up for work on time; they expect to be paid for that work on time.

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