Changing a payroll schedule can have significant effects on how your employees are paid, the way benefits and deductions are processed, and the overall flow of your payroll operations. This article will guide you through the potential consequences of switching schedules, what to expect during the process, and how GoCo handles the transition to ensure a smooth experience.
Consequences of Changing a Payroll Schedule
Switching your payroll schedule—whether from weekly to monthly, biweekly to semi-monthly, or another variation—can impact multiple areas:
- Payment Timelines: Your employees' pay periods and dates will shift. This means that the gap between when work is performed and when employees are paid could either shorten or lengthen depending on the new schedule.
- Overtime Calculation: Adjustments may be needed for overtime calculations, especially if your current schedule aligns with a specific workweek start.
- Payroll Frequency Requirements: Certain states have specific pay frequency requirements for employees. It’s essential to verify that your new schedule complies with local labor laws.
- Benefit Deductions: Benefit deductions, such as for health insurance or retirement, may need to be recalibrated to fit the new payroll cycle. For example, deductions taken on a weekly basis would need to be adjusted for a monthly schedule.
- Timesheets: When you change a pay schedule, GoCo will generate new timesheets for employees on the new schedule, while still allowing access to their previous timesheets, including the current and upcoming periods.
What to Expect
When you decide to change your payroll schedule, here's what happens in GoCo:
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GoCo Support: Pay schedule changes in GoCo must be handled by our support team to ensure accuracy and prevent issues with historical payroll data. You can’t change an existing pay schedule on your own but can contact our team to assist with setting up a new schedule or editing the existing one.
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Creating vs. Editing Pay Schedules: In most cases, a new schedule is created rather than editing an existing one. This ensures your historical payroll data remains intact and provides clear boundaries between the old and new schedules.
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Timesheets and Time Tracking: For hourly employees, timesheets will need to align with the new pay periods. You may need to remind employees about the new deadlines for submitting their hours. Any missed periods will need to be addressed during the transition.
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Benefit Deductions and Withholdings: GoCo automatically adjusts recurring deductions and withholdings based on the new schedule. However, it’s important to confirm that everything looks correct after the switch, especially for voluntary benefits like health, dental, or retirement plan contributions.
Transitioning Pay Schedules
When transitioning between payroll schedules, timing is critical to avoid confusion or payroll disruptions:
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Finalizing the Old Schedule: Complete all payrolls under the old schedule before initiating the new one. For example, if switching from biweekly to monthly, ensure all biweekly payrolls are closed before the monthly schedule begins.
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First Payroll on the New Schedule: The first payroll under the new schedule may require additional attention. Employees may need to be paid for a shortened or extended period to bridge the gap between the two schedules.
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Notifying Employees: It’s essential to communicate schedule changes to your employees in advance. They need to know when their pay dates are shifting, how it affects their regular pay, and when they can expect their next paycheck.
Additional Considerations
- Compliance: Verify that your new schedule meets any applicable state requirements for pay frequency.
- Paying in Arrears: For hourly workers, paying in arrears allows time to process hours worked before the payroll date. A 5-day arrears period is recommended to ensure accuracy. This will continue to apply even with the new schedule.
If you have additional questions please reach out to our support team.