Page 254 - Essentials of Payroll: Management and Accounting

Payments to Employees
in cases where employees are highly compensated and can tolerate the
long wait. Because there are only 12 payrolls per year, this is highly effi-
cient from the accounting perspective. One downside is that any error
in a payroll must usually be rectified with a manual payment, since it is
such a long wait before the adjustment can be made to the next regular

payroll.
The general provision for payroll periods under state law is that hourly
employees be paid no less frequently than biweekly or semimonthly,
while exempt employees can generally be paid once a month.Those states
having no special provisions at all or generally requiring pay periods of
one month or more are Alabama, Colorado, Florida, Idaho, Iowa, Kansas,
Minnesota, Montana, Nebraska, North Dakota, Oregon, Pennsylvania,

South Carolina, South Dakota, Washington, and Wisconsin. But these
rules vary considerably by state, so it is best to consult with the local
state government to be certain you have accurate information.
The other pay frequency issue is how long a company can wait after
a pay period is completed before it can issue pay to its employees.A delay
of several days is usually necessary to compile time cards, verify totals,
correct errors, calculate withholdings, and generate checks. If a compa-
ny outsources its payroll, there may be additional delays built into the
process, due to the payroll input dates mandated by the supplier. A typi-

cal time frame during which a pay delay occurs is three days to a week.
The duration of this interval is frequently mandated by state law; it is
summarized in Exhibit 9.1.
The days of delay listed in the exhibit are subject to slight changes
under certain situations, so be sure to check applicable state laws to be
certain of their exact provisions. Also, be aware that any states not
included in the table have no legal provisions for the maximum time

period before which payroll payments must be made.

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