{"id":194896,"date":"2021-07-02T10:58:29","date_gmt":"2021-07-02T14:58:29","guid":{"rendered":"https:\/\/www.attendancebot.com\/blog\/?p=194896"},"modified":"2024-07-05T04:39:31","modified_gmt":"2024-07-05T08:39:31","slug":"if-payday-falls-on-a-holiday","status":"publish","type":"post","link":"https:\/\/www.attendancebot.com\/blog\/if-payday-falls-on-a-holiday\/","title":{"rendered":"What Can an Employer do if Payday Falls on a Holiday?"},"content":{"rendered":"

Employees in every organization look forward to payday. According to <\/span>Nielsen<\/a><\/strong>,<\/strong> 58%\u201375% of employees earn just enough to pay the bills each month. <\/span><\/p>\n

With so many employees living paycheck to paycheck, organizations must ensure that the wages and salaries are paid on time. However, sometimes, it becomes challenging to make the payments<\/span> if payday falls on a holiday.<\/span><\/p>\n

Before we dive into the nitty-gritties of processing payroll on holidays, you can refer to our article on federal holidays for the year<\/a><\/strong>. By knowing what the holidays are you can map out when a pay date falls on a holiday.<\/p>\n

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Why Can’t Employers Make Payments if Payday Falls On a Holiday?<\/b><\/h2>\n

You must be wondering why the salary payments cannot be made on holidays. The answer is quite simple. All the payments are made through the bank, and the banks are closed on the weekends and federal holidays. Due to this, there is no possibility of bank payments on bank holidays.<\/p>\n

Most employers pay their employees through direct deposit. In this process, the money goes from the company’s payroll account directly to the employee’s account. This transfer is facilitated by the Automated Clearing House (ACH), an electronic network for making direct deposits.<\/span><\/p>\n

However, it is impossible to make any direct deposit on holidays. The ACH functions from Monday to Friday, excluding holidays. When the payday falls on a weekend or bank holiday, wages to the employees get postponed by a day. If there is a payday after a bank holiday, the payroll process gets delayed for the week.<\/p>\n

What to do if Payday Falls On a Holiday?<\/b><\/h2>\n

There are typically three solutions that can be adopted if payday falls on a holiday. With so many employees living paycheck to paycheck it becomes important to pay them with as little uncertainty as you possibly can. With employee satisfaction<\/a><\/strong> being the end goal, there are three options available to employers.<\/p>\n

Run the Payroll at the Usual Pace<\/b><\/h3>\n

One solution is to run the payroll as usual, where the employees get paid after the holiday, even if payroll falls on a holiday.<\/p>\n

Although there is nothing mentioned in the Federal and State Labor Laws that go against this solution, one must always consider the employee satisfaction and attrition rates when adopting these solutions.<\/span><\/p>\n

Decisions need to be taken according to the compliance laws and policies of the organization. However, it should be made sure that employees are kept in the loop and informed about any changes in the pay date.<\/span><\/p>\n

If the organization has partnered with a third party for payroll management, it should be ensured that there is clear communication regarding the payroll processing schedule.<\/span><\/p>\n

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Run the Payroll Earlier<\/b><\/h3>\n

In this case, the employees get paid before the holiday.<\/span><\/p>\n

For example, if the payday falls on a weekend, say Saturday, ensure that the employees get paid on Friday. You can start collecting the timesheets by Monday of the same week, processing them by Wednesday so that you can pay the employees by Friday.<\/p>\n

For instance, if Friday is a holiday, as is the case with New Year in 2021, you will have to start the process one business day earlier than your regular payroll process. Start on Thursday by collecting timesheets and submit the payroll documents on Friday. Your employees will then get their salary one day before payday.<\/span><\/p>\n

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In short, your employees will be getting paid early on holidays.<\/p>\n

Another case is if there is a payday after a bank holiday, the employer will need to start the payroll process one or two business days before the usual cycle. For instance, the payday is on Thursday, and Wednesday is a bank holiday. Then make sure that the payroll documents are submitted by Wednesday of the previous week to prepare the direct deposit by Thursday.<\/p>\n

If you forgot about the holiday, you can expedite the payroll process so that the employees receive their salaries on time. You might have to pay a small fee for each direct deposit transaction expedited.<\/span><\/p>\n

For example, if your payroll process takes four days for completion, using this option, you can get it done in two days. You can submit payroll on Wednesday and Friday; the payment will be made to your employees.<\/span><\/p>\n

Creating a direct deposit calendar and schedule will help you plan your work according to the bank holidays and weekends. It will come in handy if payday falls on a holiday.<\/p>\n

Delay the Payroll Process<\/b><\/h3>\n

This process can be adopted if it is aligned with the company policy and compliance regulations. For instance, if payday falls on a holiday, say Sunday, the organization can decide to make the payments a day later, i.e., on Monday.<\/span><\/p>\n

However, it could lead to the employees being disgruntled as quite a few live paycheck to paycheck. Any delay in this payment could create inconvenience for them and negative sentiment toward the organization. Employee welfare should be the primary concern while making payroll decisions and policies.<\/span><\/p>\n

\"Payroll<\/p>\n

US Laws Regarding Payroll<\/b><\/h2>\n

If Payroll Falls on a Holiday<\/h3>\n

The Fair Labor Standard Act of 1938 necessitates the regular payment of minimum wage and overtime pay. However, it does not dictate any provisions for when remuneration timelines if payday falls on a holiday. The Act states that the companies are obligated to pay the wages and salaries on the regular payday to the corresponding pay period.<\/p>\n

Regular paydays are scheduled on working days for the business. It is primarily from Monday to Friday. According to the best HR practices, the salary should be paid a day in advance if payday falls on a holiday. For instance, the US General Services Administration<\/a><\/strong> pays its employees a day in advance if the payday falls on a bank holiday.<\/p>\n

Change in Payroll Frequency<\/h3>\n

There are strict laws that govern payroll frequency. However, pay frequency can be altered in case the following conditions are fulfilled:<\/span><\/p>\n