It is a common practice across employers of all sizes and industries to pay employees on a biweekly (every two weeks) payroll cycle. With 52 weeks in a year, that means 26 pay periods in a year. But every decade or so, an unusual circumstance arises in which employees who are paid biweekly will have 27 pay periods. The reason for this is that 26 biweekly pay periods only add up to 364 calendar days (26 pay periods x 14 days per pay period), which is one day short of a typical year and two days short of a leap year. Thus, a calendar year typically equates to 26.07 pay periods. About every eleven years, that 0.07 discrepancy adds up to 14 days, and thus amounting to an additional biweekly paycheck. This anomaly applies in 2026, and if not addressed, could result in extra pay for employees who are paid on a salary basis.
How so? Assume an employee’s annual salary is $104,000. If paid in the typical installments of 26 equal biweekly payments, each biweekly paycheck would be $4,000. But with an extra pay period in 2026, this employee would receive an extra $4,000, or $108,000 for the year. That is not an insignificant amount, even for just one employee, and could add up to an enormous amount for larger employers.
Thus, employers should look at their pay periods in 2026 and assess whether they will have an extra, 27th pay period in 2026. If so, employers have several options. Of course, one option is to just pay the extra pay, but as noted above, that could be quite costly. Another option is to inform salaried employees that due to the extra pay period in 2026, their annual salary will be divided by 27 instead of 26, meaning that each paycheck will be slightly less than the prior year (assuming no salary increase). State laws come into play here, as some states have specific requirements relating to notifying employees in advance of reductions to their pay per pay period– even though the employee will still be receiving their full salary for the year.
Any adjustment to account for an extra pay period in 2026 should be made with consideration of the effects on contractual obligations, employee benefits, payroll deductions, tax withholdings, and state and federal laws. Additionally, employers should ensure any decreases in exempt salaried employees’ biweekly wage payments do not reduce the employees’ weekly salary below the salary threshold necessary to claim an exemption under the Fair Labor Standards Act – currently $684/week – or similar state wage laws (some of which have even higher weekly salary thresholds). A failure to meet such weekly salary thresholds could result in an employee losing their exempt status, making them eligible for overtime pay.