'26 Has 27 Bi-Weekly Pay Periods: What That Means For Employers

In 2026, employers with bi-weekly payroll schedules will encounter a 27-pay-period year. Advance planning can help avoid unintended payroll and budgeting impacts.

What Is the Issue?

An employee with an annual salary is automatically and regularly paid 1/26th of that annual salary on a bi-weekly payroll (52 divided by 2). In a year with 27 bi-weekly pay periods, that same structure can result in an additional payment and therefore a higher annual salary. This is lawful. The question for employers, however, is whether that additional payroll expense is accounted for in the company budget. If not, and you want options, then read on.

What Can Employers Do?

Employers have options for addressing a 27-pay-period year. Each option has budgeting, administrative, and employee relations considerations.

Employers may choose to:

• Make an extra year-end off-cycle check on December 31 and skip the first payroll of the next year; or
• Pay employees their 2026 annual salary in 27 payments and therefore in lesser amounts per pay period; or
• Switch to a semi-monthly pay cycle (with 24 pay periods) and align more cleanly with budgeted annual salaries. 

But don't forget about the deductions. Employers must decide how deductions for benefits will be handled, including:

• Whether deductions will be taken from 27 checks (annual amount divided by 27); or
• Whether deductions will be taken from the first 26 checks only (annual amount divided by 26).

The best option is the one that works for your company and its administrative infrastructure. To determine that, employers should also consider:

• The company's budget;
• The effect of changes on employee morale; and
• Whether the business uses cash or accrual basis accounting, as that may affect the decision. Discussion with accountants is strongly recommended.

Ensure Effective Communication About Any Reductions in Biweekly Salary (Notice & Contract Compliance)

Employees must be notified of changes in their pay amounts and/or timing before such changes are implemented. Best practice is to provide at least one payroll cycle's advance notice in writing and in the language(s) your employees understand.

Ensure Exempt-Status Minimum Salary Thresholds

Exempt salaried employees must receive a minimum annual salary under applicable state and federal law. In California, that minimum is increasing on January 1, 2026.

Whatever method an employer selects for 2026 salary payments, it is critical to remember that exempt status also requires weekly salary minimums.

Current minimums include:

• Federal minimum:
  • $684 per week
  • $1,368 biweekly
• California state minimum:
  • $1,352 per week
  • $2,704 biweekly

Adjusted pay must continue to satisfy these thresholds to maintain exempt classification.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.