Charles Read, CPA, USTCP, IRSAC
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I saw this question on Quora.com and thought it was worth sharing with you.
The simple answer to the question – Do businesses who pay biweekly have a higher rate of people quitting because it frustrates employees? – is NO!
There are a few jurisdictions that force companies to pay labor jobs on a weekly basis. There are some industries that are weekly paid historically.
But much of the United States has gone to the biweekly payroll for all of the right reasons:
- cash flow,
- reduced number of tax deposits, and
Paying biweekly is half the processing as opposed to a weekly payroll. It cuts down the number of checks or direct deposits and reduces the employers banking costs. There is less processing which is always more convenient and saves the company money to invest in its employees down the road. Cash flow for the employer is radically enhanced. Issues such as monthly insurance premiums are more easily fitted to a two-week cycle.
We run tens of thousands of payrolls each year, and I have never heard a complaint about weekly versus biweekly payroll.
Of course, the gig economy is forcing the concept of on-demand payroll which may even be daily payrolls. In reality, although it appears to be daily pay, it’s really a pay advance. If it was payroll then the number of tax deposits would rise dramatically. Major companies would be making tax deposits every business day. The thought of tracking and accounting for all those deposits and checks and the movement of the money to me seems like a major disruption and high cost with very little benefit to anyone.