Calendar year 2004 has 27 biweekly pay periods for our company. The first pay date was 01/02/04 and the last will be 12/31/04. Hourly people will of course be paid for time worked. The question is how to handle Salaried people. Their annual wage is currently divided into 26 pay periods. If I change it to 27 pay periods it will reduce their check amount each payday, but they will be receiving the same annual wage. Is your company experiencing this problem? If so, how are you handling it?

I'm having the same issue. Please help me think this through. Commen sense says that we should divide their annual salary by 27 payperiods to avoid budget shortfalls. However, perhaps,I'm not very smart, but I seem to think we don't have to. We also got paid biweekly on 1/2/04. Our payperiod actually ended 1/2/04, with employees being paid the same day. Since we're accrual based, most of the expense for that first 1/2/04 check was accrued in December 2003. I accrue based on employees daily pay rate, and how many days fall into different fiscal periods. So, 2003 has only one day of expense for that extra payperiod in it. With 2004 being a leap year, isn't the only problem that one extra day of payroll expense? I think that may be the only "raise" they get. Additionally, we're on a June 30th fiscal year. So, the 27 payperiods don't hit our books until 2005/06. What am I missing here? Shanna

I have decided to not change salary amounts. My logic is based on the fact that the 01/02/04 paycheck was entirely expensed in December. I don't think the accrual of the expense is the issue here though. I think the issue is the W-2 wages that will be on the 2004 W-2s. I am going to ignore this and allow the 27 pay periods.

We are ignoring the 27 pay issue. It is strictly a time issue for when the wages are paid, not earned. We accrue based on when earned and if the salaries are adjusted to 27 pays, then the employees are technically earning less than they are supposed to. I know some businesses are adjusting for the 27 pay situation, but it really is only a timing issue for tax reporting if your company accrues wage expenses based on when earned and not paid. I hope this helps.