Payday Date Changes: Can Employers Legally Alter Them?

Changing payday dates can be a sensitive issue, as it affects employees' personal finances and budgeting. While employers can legally change payday dates, they must take certain steps to ensure they are doing so correctly and minimizing resistance from employees. The Fair Labor Standards Act (FLSA) does not prohibit employers from changing paydays, but it requires that employees be paid promptly and that wages are paid when due, which is typically the next regularly scheduled payday. Employers must also ensure that changes are made for legitimate business purposes, are permanent, do not violate minimum wage laws, and do not unreasonably delay payment of wages. Proper communication and documentation of changes are essential to ensure compliance with the law and to minimize the financial impact on employees.

The Fair Labor Standards Act (FLSA)

Employers can legally change payday dates, but they must follow certain procedures to ensure they do it correctly. The Fair Labor Standards Act (FLSA) does not prohibit employers from changing paydays. However, the FLSA requires that employees be paid promptly and that wages must be paid when due, which is generally the next regularly scheduled payday. The FLSA does not specify the exact timing of payroll but leaves it to the employer's discretion.

The FLSA establishes minimum wage, overtime pay, record-keeping, and youth employment standards for employees in the private sector and federal, state, and local governments. It sets a minimum wage of $7.25 per hour, effective July 24, 2009, and requires overtime pay at a rate of one and a half times the regular pay after 40 hours of work in a workweek. The FLSA also includes provisions to protect the educational opportunities of minors and prohibits their employment in jobs or conditions detrimental to their health and well-being.

The FLSA covers "any individual employed by an employer" but does not apply to independent contractors or volunteers as they are not considered "employees" under the act. Certain exemptions exist, such as the “white-collar" exemption for professional, administrative, and executive employees, which relieves employers from meeting the statutory minimum wage, overtime, and record-keeping requirements. These exemptions are narrowly construed, and employers must clearly demonstrate that their employees fall within the exemption criteria.

The FLSA has undergone several amendments over the years, including the 1966 amendment that expanded coverage to some farm workers and increased the minimum wage to $1.60 per hour. In 1972, Congress enacted the Education Amendments, which amended the FLSA to expand the Equal Pay Act's coverage to executive, administrative, and professional employees. The most recent amendment, published on April 26, 2024, updated the regulations for exempt employees, including revisions to the standard salary level and highly compensated employee total annual compensation threshold.

State laws

In Minnesota, employers must pay their employees for all wages, including salary, earnings, and gratuities, at least once every 31 days, and all commissions earned by an employee at least once every three months on a regular payday. In Mississippi, payment is required once every two weeks or twice during each calendar month for entities engaged in manufacturing employing 50 or more employees and employing public labor.

In Arizona, paydays must occur at least twice a month, not more than 16 days apart. In Connecticut, longer intervals (up to monthly) are permitted if approved by the labor commissioner. In Hawaii, employees may choose to be paid on a monthly basis under a special election procedure, and the director of labor and industrial relations may grant exceptions to the general semi-monthly payday requirement.

In Texas, employees exempt from the overtime provisions of the federal Fair Labor Standards Act (FLSA) must be paid at least once a month, while other employees must be paid at least twice a month. In Utah, employees on a yearly salary can be paid on a monthly basis. In Vermont, employers may implement bi-weekly and semi-monthly paydays with written notice.

Employee finances

Employers can legally change payday dates, but they must follow certain procedures to ensure they are doing it correctly. The Fair Labor Standards Act (FLSA) does not prohibit employers from changing paydays, but it does state that wages must be paid when due, which typically means the next regularly scheduled payday. This means that employees must be paid promptly, but the FLSA does not specify exactly when.

Changing the payday date can have a significant impact on employees' finances and budgeting. It can affect employees' ability to pay their bills and manage their debt. For example, if employees are used to being paid mid-month and then have to wait until the end of the month, they may struggle to cover their expenses for that additional period. This could result in employees having to withdraw money from their savings, losing out on interest, or going into debt.

To minimise resistance and disruption to employees, employers should carefully plan and communicate any changes to payday dates. They should be transparent and provide the necessary support to employees during the transition. Employers should also ensure that any changes are properly documented and agreed upon by employees.

Additionally, employers should be aware of state laws and regulations regarding the timing of payroll. Some states have their own requirements, such as posting the schedule in a common area. It is important for employers to stay compliant with any applicable laws and regulations when making changes to payday dates.

Employer communication

While employers can change payday dates, it is a decision that should not be taken lightly. It can have a significant impact on employees' personal finances and budgeting, as altering the pay date within a month can disrupt standing orders for bills, mortgages, or rent. Therefore, it is essential to have thoughtful planning and transparent communication with employees to minimise resistance and provide the necessary support during the transition.

Provide Clear and Timely Notice:

Give employees ample notice about the upcoming change in payday dates. A notice period of around three months, as mentioned in one of the sources, can be considered a good practice. This advance notice will allow employees to adjust their financial plans and make any necessary arrangements to accommodate the new payday schedule.

Explain the Reasons:

Communicate the reasons behind the decision to change the payday date. Be transparent and explain the legitimate business purposes that make the change necessary. This can help employees understand that the decision is not arbitrary but is made for the overall benefit of the company.

Address Concerns and Provide Support:

Recognise that changing payday dates can cause concerns among employees regarding their financial planning. Address these concerns directly and provide support to help them navigate the transition. For example, you can offer guidance on adjusting direct debit dates or provide resources on financial management.

Ensure Compliance with Legal Requirements:

Familiarise yourself with the relevant laws and regulations regarding payday schedules, such as the Fair Labor Standards Act (FLSA) or state-specific regulations. Ensure that any changes you make comply with these laws, including paying wages when due and not unreasonably delaying payment.

Engage with an HR Specialist:

Consider engaging with an outsourced HR company or seeking legal advice to ensure that you are approaching the situation correctly. They can provide guidance on crafting a comprehensive communication strategy, supporting your employees during the transition, and ensuring that all necessary documentation and agreements are in place.

Offer Additional Compensation (if feasible):

Although not a requirement, you may consider offering additional compensation to employees who may be financially impacted by the change. This could be in the form of a one-time bonus or an advance on their wages, which can help ease the transition and show your commitment to supporting your employees.

Prompt payment

In general, employers can change payday dates, but they must follow certain procedures to ensure they are doing it correctly and in compliance with the Fair Labor Standards Act (FLSA). The FLSA requires that employees be paid promptly when due, which generally means the next regularly scheduled payday. However, the law does not specify exactly when or how frequently wages must be paid.

Changing the payday date can have financial implications for employees, as it may cause a delay in receiving wages and affect their ability to pay bills or incur additional costs, such as interest on savings or debt. Therefore, employers should give adequate notice and consider the impact on their employees when making such changes.

In the United States, there is also the Prompt Payment Act (PPA) under federal law, which applies to federal contractors and agencies. The PPA ensures timely payments and addresses interest on late payments for contract-based construction projects. Additionally, states like Arizona have implemented their own prompt pay laws, which set specific timelines for payments in the construction industry to ensure fairness for all parties involved.

Frequently asked questions