Each year, some employers will be faced with the dilemma of having an extra pay day caused by the calendar. Because a normal year has 365 days, one day of the week will occur 53 times in a year. In a leap year (2016), which has 366 days, two days of the week will occur 53 times. The days of the week that occur 53 times in the calendar year 2016 are Friday and Saturday.
For employers who pay their employees on a weekly or biweekly basis, and whose paydays fall on the extra days of the week just mentioned, an extra payday will occur.
Hourly employees must be paid their agreed-upon hourly wage for all hours worked, regardless of the extra payday.
Employers are free to reduce salaried employees’ pay for each pay period in a year when faced with an extra payday, so long as there is no contract guaranteeing a certain amount of pay each weekly or bi-weekly payday, and the employee’s pay is not reduced below the minimum required by state or federal law. As an example, Irving, a salaried, exempt employee earning $52,000 per year, is paid weekly on Friday. His normal weekly gross wages are $1,000. If his employer pays him $1,000 per week every Friday in 2016, Irving would be paid $53,000 in 2016. To make sure Irving is paid $52,000 in 2016, his weekly pay is reduced to $981.13.
Many employers do not recompute their weekly or biweekly pay. Reasons for this include the probability of strained employer-employee relations if wages are reduced for each pay period, and the other reason is that often salaried employees are promised a certain weekly or biweekly pay rather than a guaranteed yearly amount.
If weekly or biweekly pay will not be recomputed, wage expenses may increase in such years, depending on the accounting method used for payroll, and these expenses must be accounted for to company executives and the finance department.