Bi-monthly vs. bi-weekly payroll: Understanding the differences

If you’ve ever used the words “bi-weekly” and “bi-monthly” interchangeably to refer to a roughly twice-a-month pay schedule, we understand. But did you know that these terms actually describe two different pay frequencies? And that the secret to streamlining your payroll management and saving time on manual tasks that come with payroll administration might lie in switching from one to the other?

In this article, we’ll delve into the nitty gritty of bi-weekly versus bi-monthly payroll, including how each pay schedule impacts employees, their best-fit industries, and factors to consider when choosing the right one for your organization. 

What is bi-weekly pay?

If your organization operates on a bi-weekly payroll schedule, employees receive their paychecks on the same weekday every other week. That means 26 pay runs every year for you and paychecks every two weeks for your employees. The majority of the year, this means two paychecks each month, but in some months employees get paid three times. 

Example: Alex’s total annual salary as a Vice President for Acme Corp. is $91,000. Acme Corp. uses a bi-weekly payroll schedule. In August 2024, Alex received three paychecks, each for $3,500, on the 2nd, the 16th, and the 30th.

For employees, a bi-weekly payroll schedule can simplify personal budgeting. Employees always know when they’re getting paid, and more frequent paychecks can cushion workers against hardship from unexpected expenses. 

Organizations with a large number of hourly employees may find it easier to calculate pay and overtime using a bi-weekly schedule. A bi-weekly payroll schedule will always cover two working weeks, which typically equals 80 working hours. To find your hourly workers’ compensation, multiply the fixed hourly rate by 80, and you’re done. The same logic applies to overtime calculations for non-exempt employees. In most cases, all you need to do is subtract 80 from the total hours worked, and what’s left is their overtime hours (the calculation is a bit more complex in jurisdictions where overtime pay is required after a certain number of hours per day). 

What is bi-monthly pay?

Sometimes also called ‘semi-monthly,’ under a bi-monthly pay schedule, your employees receive their paychecks on two set days each month, typically the 1st and the 15th or the 15th and the 30th. That works out to 24 pay runs yearly and two paychecks monthly, regardless of the number of weeks in a given month. 

Example: Jordan’s total annual salary as a Senior Manager for Widgets, Inc. is $91,000. Widgets, Inc. uses a bi-monthly payroll schedule. In August 2024, Jordan received two paychecks of $3,791 on the 1st and the 16th. 

A bi-monthly payroll schedule offers employees the same predictability as bi-weekly, as long as their employer provides clear communication around policies and procedures when a payday falls on a bank holiday or over the weekend. 

Organizations that rely primarily on salaried employees may find a bi-monthly schedule easier to manage because it streamlines expense reconciliation and payroll withholding. Some states also require employers to issue payroll on a bi-monthly basis to simplify compliance and reporting.

Difference between bi-weekly and bi-monthly pay

Bi-weekly vs bi-monthly: Which is best for your business?

For certain industries, a particular pay schedule may intuitively make more sense than another based on the nature of the workforce. 

Hospitality and retail, for example, rely heavily on hourly workers for whom overtime plays an important role in personal budgeting. Bi-weekly pay scheduling simplifies overtime calculations for employers and offers workers financial security in the form of more frequent, predictable paychecks. 

In sectors like finance or technology, where most workers are salaried and receive comprehensive benefits, a bi-weekly pay schedule makes withholdings less complex.

Note that some jurisdictions mandate a particular pay frequency. Each US state sets its own requirements for pay schedules, with some requiring bi-monthly pay cycles to coincide with state tax filings. Internationally, countries such as Canada, France, and Germany all require at least monthly payments, though employment and union contracts may specify bi-weekly or bi-monthly pay periods.  

Payroll considerations for bi-monthly and bi-weekly pay schedules

No two organizations operate exactly the same way, and what works for one may not suit another for reasons ranging from size to industry to culture. If you’re not in a state with a mandatory pay schedule, the following factors can help you identify the pay frequency that best supports your employees and your business.  

Paycheck consistency and employee satisfaction

Inconsistency and confusion around payroll have been linked to decreased employee morale, so clarity and effective communication around paydays matters, regardless of the payroll schedule you choose. It’s important to understand the implications of each pay schedule and keep your employees in the loop about when they can expect to receive their wages or salaries.   

Budgeting and cash flow management

For businesses using a bi-weekly payroll model, longer months with three pay cycles may require some advance planning to ensure you have the cash on hand to meet your obligations to employees and vendors. 

A bi-monthly payroll schedule, on the other hand, more closely aligns with traditional billing cycles, including for employee benefits. If your headcount consists mostly of salaried employees, issuing paychecks twice monthly may simplify withholding calculations.

Ensuring compliance with payroll regulations

No matter what payroll schedule you adopt, you’ll need to comply with state and federal laws, such as the Fair Labor Standards Act (FLSA), which regulates minimum wages, working hours, and overtime pay. Depending on the composition of your workforce, you may find that one system offers more clarity or reduces your administrative burden more than the other.

Some states also mandate specific pay frequencies, so it’s important to understand whether your preferred pay schedule complies with local laws. Arizona, for example, only allows bi-monthly pay schedules, while Iowa gives employers a choice between weekly, bi-weekly, bi-monthly, and monthly pay schedules.

Payroll processing efficiency

When you think about payroll efficiency, consider both time and accuracy. Do you have a large number of hourly employees? Does your current pay schedule make overtime errors more or less likely? Do your HR professionals have enough time to review payroll documentation and follow processes? Or would they benefit from fewer pay cycles, giving them extra time before approval?

Bi-monthly vs. bi-weekly pay: pros and cons

Before choosing a payroll schedule, you’ll want to understand the advantages and disadvantages of each system. Depending on your industry, organization size, and location, you may see a clear incentive to opt for one over the other. 

Advantages of bi-monthly pay

Increased payroll efficiency

With fewer pay cycles than a bi-weekly payroll schedule, a bi-monthly system can reduce the time your HR professionals spend on payroll administration tasks. Conversely, fewer pay runs can also afford the person overseeing payroll more time to review reports and filings for accuracy.

Easier calculation of benefits deductions

Billing cycles for benefits like healthcare and retirement contributions typically run on monthly cycles, which better aligns with a bi-monthly payroll schedule. 

Rather than distributing annual benefits costs over 26 individual pay periods, you simply divide each employee’s benefits costs in two and deduct the amounts from each bi-monthly paycheck. 

Advantages of a bi-weekly pay

More frequent paychecks for employees

A bi-weekly payroll schedule offers 26 pay periods per year—two more than under a bi-monthly system. That means that in some months, usually those with five weeks, your employees receive three paychecks. 

Simplified overtime calculation

A bi-weekly payroll system simplifies overtime calculations by standardizing the number of working hours in a pay period. Each pay cycle covers two working weeks, and stays consistent throughout the year.

Disadvantages of bi-monthly pay 

Inconsistent paydays due to weekends and holidays

One significant drawback of bi-monthly pay schedules? When paydays fall on weekends and bank holidays, employees may receive their paychecks later or earlier than anticipated. Employers need clear policies and communication around when employees will be paid in these situations, but even with clear expectation-setting, employees may struggle with personal financial planning and budgeting.

Complexity in handling overtime

Because a bi-monthly pay schedule doesn’t always neatly align with workweeks, calculating overtime for hourly employees can require more time and effort to ensure accuracy. 

Disadvantages of bi-weekly pay 

Additional payroll processing time

The two additional pay cycles in a bi-weekly pay schedule may impose an unnecessary administrative burden, especially for smaller businesses and those operating with leaner teams. More frequent processing also means more opportunities for errors, particularly if you process payroll manually rather than using software to automate it.

Cash flow management challenges during three-paycheck months

Employees may enjoy those three paycheck months, but for employers, they can pose some cash flow and budgeting challenges. It’s essential for organizations using this system to plan ahead and allocate sufficient cash to meet payroll and other obligations in months with an “extra” pay period.

Optimize Your Payroll with Rippling

Running a business is complex, but payroll software shouldn’t be. Rippling offers a 100% error-free guarantee, compliance automation, and endless configurability—and allows you to run payroll in minutes so your team can focus on more important work, like growing your business.

With Rippling, you can: 

• Pay employees and contractors in the same platform
•  Manage time and attendance natively 
• Run unlimited off-cycle pay runs at no extra cost 
• Set up multiple pay schedules, pay rates, and pay types in just a few clicks 
• Add recurring reimbursements (like cell phone payments, gym memberships, etc.) that are automatically paid out every pay period, monthly, or at whatever interval you choose
• Automatically calculate prorated pay runs for new or promoted employees 
• Manage all currency conversions, including payroll adjustments 
• Automatically calculate overtime for every country 
• Make changes after submitting payroll

Frequently asked questions

Why do companies prefer bi-weekly pay?

Some companies prefer bi-weekly pay because it can make calculating pay and overtime for hourly workers more straightforward. Some organizations may also opt for this pay schedule to provide employees with more consistent paychecks. 

How many hours is a bi-monthly pay period?

The number of hours in a bi-monthly pay period will vary depending on when you pay your employees, but is typically around 87 working hours. (40 working hours per week multiplied by 52 weeks in the year divided by 24 pay cycles) However, in states with specific overtime rules or organizations with particular schedules and shifts, the number of hours will change. 

What is the best payroll frequency?

The best payroll frequency is one that provides your employees with peace of mind and reduces the administrative burden of payroll management for your HR professionals. For a business that pays many of its employees on an hourly basis, that may mean a bi-weekly payroll schedule. For organizations with mostly salaried employees and additional payroll reporting requirements, bi-monthly may make more sense. 

How does semi-monthly pay work?

Under a semi-monthly pay schedule, also known as a bi-monthly pay schedule, you’ll issue paychecks twice every month on specific days. Usually, organizations opt for either the 1st and the 15th or the 15th and the 30th to coincide with billing cycles. When the scheduled payday falls on a weekend or a bank holiday, you’ll typically issue paychecks on the closest business day before or after.  

If you get paid on the 15th and 30th, what are the pay periods?

If you get paid on the 15th and the 30th of each month, your pay periods likely cover the 1st through the 15th and the 16th through the 30th. That is, you receive pay on the 15th for work done from the 1st of the month through the 15th and again on the 30th for work done from the 16th through the 30th. 

How many bi-weekly pay periods in a year?

There are 26 bi-weekly pay periods in a calendar year.

How many semi-monthly pay periods in a year?

There are 24 bi-weekly pay periods in a calendar year.

This blog is based on information available to Rippling as of September 20, 2024.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.