Is this a normal payroll thing?
Asked by
eroi (
33)
October 22nd, 2013
from iPhone
So I started a new job and something strange is up with the payroll. I get payed every 2 weeks, but my paycheck is late! Either I don’t understand what’s going on or I am just straight up getting paid late consistently. Basically, pay day is on Monday, I am signed up for direct deposit because I want my paycheck immediately, some folks live paycheck to paycheck and that’s important to a lot of people to get their money on pay day. I’m looking at my latest online stub and while I’m paid for the last 2 weeks, the direct deposit check is signed for a future date, two days from now, so it won’t clear until Wednesday. This is what bugs me, now by the time I get my bi-monthly paycheck, I’ve worked two extra days. Is this normal? I’ve always been payed weekly, and I would get payed by Friday afternoon sharp, I wouldn’t have to wait two business days for my check. What’s going on?
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15 Answers
Yes, this is normal. I’ve worked for companies which pay on a week delay.
It’s no fun on the first go-round for you, but it means that payroll has time to use actual hours worked instead of an up-to-the-minute estimate.
Are you sure you get paid every two weeks or could it be the 15th and the last day of the month? Direct deposits are often deposited early.
I’d say it was faster than normal. I used to get paid at the end of the month for the previous month.
Now we submit invoices every two weeks within one week of the last working day. My customer pays the invoice within 30 days after receipt of invoice.
@jaytkay So what happens to the extra two days of pay every week, do they just float around and never catch up?
That’s a normal payroll thing.
Okay I understand saving the payroll department the stress of being up to the minute on paychecks by doing it simply within a week of pay day, so I’ll narrow down my question even more. If they’re trying to save time, then why would they even bother issuing the check’s for a future date, if they’re doing payroll on pay day, whats the point of signing it for the future? That’s not saving anybody time, it’s just delaying the pay. And what happens to the extra days I’ve worked, waiting for my paycheck? Do they float around in empty space and never catch up until I get a final paycheck for whatever hypothetical reason that could be?
No, it’s on your next check.
In my clinic, for example, the pay periods are the 1st-15th, and the 16th-30/31st. Pay days are on the 7th and the 22nd. No one gets cheated, everyone gets paid for what they work, there’s just a delay.
Why is there a delay? Well, the payroll can’t be processed until the end of the last workday of the pay period (and since we’re a 24 hour facility, that means midnight). Then the pay, deductions, and taxes are calculated, the paper stubs are printed and mailed, and the electronic transfers are prepared. There’s allows for a window for late changes (employees who forgot to submit their vacation hours, for example), for fixing any errors, and adjustments. And if the pay day falls on a Saturday, Sunday, or Monday, it goes in early; if we were paid on the day after the end of the pay period, we’d get our pay late.
You don’t get cheated out of any pay.
Thanks for the answer @syz I’m just having a hard time wrapping my head around this. Maybe if you can help me relate this to my personal scenario it would help me a lot. I get payed every other monday, but the checks are signed two days into the future (wednesdays), I get payed for my two weeks of work between the 1st monday and 3rd monday, but by the time I get payed I’ve worked tuesday and wednesday. Yes, my previous 2 weeks of work technically are on my paycheck, the previous 2 days haven’t yet. So it’s a perpetual cycle of 2 days behind on pay. Does that make sense?
If you left the job on payday, you would get the final 2-day check in two weeks.
@jaytkay So what you’re saying is I will never see those 2 days of pay unless I am no longer on payroll?
@eroi Yes. The days are not lost. You will get those two days after your last normal pay check. I my case we get our last month’s pay over a month after leaving the company. Technically you can say they are making 2 days of interest on your pay per year. But with the low interest rates banks are offering if you run the math you will find the company is not getting rich off that interest. Let’s assume your check is $100 per day. Let’s further assume the interest rate is 1% APR. ( it is probably half that). Two 2 days pay at that rate for an entire year is ... wait for it…$2.00! That is not why they are waiting the 2 days. One phone call asking about it would cost them much more. They need time to have their payroll department do it right – and to train you to not expect it immediately. Just imagine how bad it would be if they magically were able to pay you right to the last second you worked and you got used to it. If they ever had a banking glitch your checks would bounce costing you and them a significant amount of money. I think it is incredible they manage to pay you so quickly. The only way I have ever seen faster is cash under the table for day labor.
Forget about it and when the two days pay comes after you quit, it will be a little present.
Okay I think I understand it now @LuckyGuy I feel bad for people who have to wait longer, I guess two days isn’t all that bad, I’ll consider myself lucky over it now as some people have to wait much longer!
Companies need time to process a payroll, even if everyone is on salary and no hours need to be computed. Payroll is one of the things you HAVE to get right. Screwing up payroll is one sin your employees will never forget.
Banks need a day to process your payroll if not two. I had a multi-state payroll, (generally 10–12 states) which meant transmitting payroll, withholding and payroll taxes. I paid on Thursday for the two weeks ended the previous Saturday. The bank needed two days to process payroll for multiple states and charged my account two days in advance for withholding and taxes and one day in advance for net payroll.
Some companies need to make sure that they can cover payroll or need to move funds from an operating or reserve account into a payroll disbursement account. This takes a day or two also.
@srmorgan Yes I understand that, but if they’ve already gone through the process of preparing the checks online, why would they sign them for a date in the future? I don’t understand how its saving them time if they’ve already written the checks out, they’re just putting a future date on them. Ah it’s so confusing to me
On their end, they may have an “operating account” or something similar that the checks are drawn against. They don’t keep all their money in that account, just enough to cover expenses.
So once they figure payroll, they generate checks and transfer the funds. It could be from the same bank, it could be from different banks, it might be a line of credit, it may change month to month. So the two days just make sure everything has time to settle before those checks start being cashed.
I would guess they also use that account as a control mechanism. They hand out a lot of checks with that information, probably have debit cards that draw from it, and who knows how many folks have access, if there are limited funds in there then they have limited exposure.
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