Employers use one of a few standard payroll cycles. While some follow a monthly or weekly period, most have a semi-monthly (twice per month) or biweekly (every other week) schedule. In fact, biweekly is one of the more common payroll cycles, with 43% of employers following this cadence, according to a report from the Bureau of Labor Statistics.
For employers that run biweekly payroll, 2026 introduces a unique scheduling challenge. Because Friday, Jan. 1, 2027, is a federal holiday, many employers that typically use a Friday pay date will need to shift that payday earlier in the week— placing it in 2026. As a result, under most payroll structures, Thursday, Dec. 31, is likely to become the final payday of 2026. This extra payroll period can impact salaried employee requirements, benefits contributions and more, creating potential compliance and operational challenges.
The cadence of 27 payroll dates happens roughly once every 11 or 12 years due to mismatching days (365 days per year and 14-day pay cycles) and an extra day for leap year happening every four years.
Impact on Payroll
A year with a potential extra pay period can create several payroll challenges, particularly for employers with salaried employees who must be paid a predetermined amount each pay period. Due to this distinction, most employers are either planning a pro-rated adjustment (dividing the annual salary by 27 rather than 26) or continuing pay cycles as usual, adding an extra pay date on Dec. 31 and paying employees an extra 3.85% in 2026. Generally, even employers planning for 27 payroll cycles complete benefits deductions for the first 26 paychecks.
This additional cycle can introduce complianceissues and operational complexities impacting:
- Fair Labor Standards Act compliance
- Salaried employee requirements
- Notice requirements
- Tax withholdings
- Payroll budgets and accuracy
- Benefits contributions
Employer Payroll Strategies
There are two major ways that employers with a biweekly payroll cadence are proceeding in 2026:
1. Pro-rated adjustment—Under this formula, employers divide the annual salary by 27 ratherthan 26. For example, an employee with a salary of $70,200 would receive 27 equal paychecks of $2,600 before payroll deductions such as benefits and taxes. This payroll method simplifies the year-long payroll process and helps to avoid overpayment; however, it lowers the biweekly payroll of employees. Workers would defer funds by receiving less take-home pay per paycheck, which would be distributed with the 27th paycheck on Dec. 31. Under this method, reports show that most employers conclude benefits contributions after 26 pay cycles.
2. Pay cycles as usual—Under this structure, employers pay the normal amount for each of the 26 cycles, with a 27th cycle added on Dec. 31. This means employers will pay their salaried employees an extra 3.85% in 2026. This choice leads to an increase in total salary paid, especiallyfor employers with large numbers of salaried workers. For example, an employee with a salary of $70,200 would continue to receive 26 equal paychecks of $2,700 before payroll deductions such as benefits and taxes.
In 2026, an extra biweekly payroll period presents both operational and compliance challenges for employers. While many payroll vendors and platforms help organizations stay organized, it may be better for employers to audit payroll than make mistakes that impact employees or violate compliance requirements. Employers should consider seeking local legal counsel to ensure their payroll practices are in compliance with all applicable laws and regulations.
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