There is a phenomenon that occurs every 5 to 11 years, depending on whether you pay your employees weekly or biweekly: the extra payday in the calendar year; leap payroll. Think of it as to why there is an extra day in February every four years. It takes the Earth 365 days, 5 hours, 48 minutes, and 45 seconds to circle the Sun, so every four years we get February 29 to catch up. For many companies, the extra payroll in the year passes without much thought, but maybe it shouldn’t; especially this year. If your check date falls on a Friday, 2026 may likely be your year. Why is this occurring in 2026? The math behind this issue is similar to why there is a leap year: 365 days in a year divided by 7 days in a week equals 52.14 weeks (365/7=52.14) Those decimal points accumulate over time until they equal a full extra pay period. For employers with Friday check dates, 2026 started on Friday, January 2. If you count every two weeks from there, your 27th biweekly check date falls on Friday, January 1, 2027. Because New Year’s Day is a federal banking holiday, standard practice is to move that check date backward to Thursday, December 31, 2026, the preceding business day. By moving that check date back into December, you pull that extra payroll run directly into the 2026 tax year. It is somewhat self-inflicted by shifting the date, but if you pushed it forward to Monday, January 4 instead, you would simply pass the extra payroll on to 2027. The calendar math catches up eventually.
The Effect on Hourly vs. Salaried Employees
For hourly employees, there is no issue when it comes to pay. They are paid for actual hours worked per pay period, so their checks stand on their own. For salaried employees, this is where the concern lies. If a salaried employee earns $52,000 per year, dividing by 26 gives them $2,000 per check. In a normal year, their W-2 reflects $52,000. In a 27-pay-period year, their W-2 will reflect $54,000.
When employers realize this, the panic usually starts. Here are your main options:
- Pay the Extra Period (Recommended): Maintain their regular check amount. Their total annual earnings will be slightly higher, but cash flow stays steady and predictable for the employee.
- Divide Salary by 27 (or 53): Recalculate their check at the start of the year. This avoids paying extra gross pay for the year, but it results in roughly a 3.7% pay cut on each regular check. It can be a hard sell to employees and requires caution to ensure exempt staff members do not fall below minimum salary thresholds under the FLSA. Since we are already in October, this may be awkward to adjust the salary over the next 3 months of the year.
- Switch Salaried Employees to Semi-Monthly: Paying on a semi-monthly schedule (24 pay periods a year) completely eliminates leap payroll years. It keeps budgeting clean and consistent every year.
Watch Out for Benefit Deductions
If you calculate medical insurance premiums by taking a monthly amount, multiplying by 12 and dividing by 26 (for a biweekly payroll), collecting that deduction on a 27th check results in over-withholding from your employees. The best approach is to block fixed benefit deductions on that 27th check. Your employees will appreciate the “deduction holiday” on their final check of the year, and you avoid over-collecting premiums.
Preparation is Key
If your payroll calendar triggers a 27th biweekly or 53rd weekly check on December 31, 2026, take time now to set up your deduction rules and decide how you will handle salaried compensation. Communicating with your team before the year ends will save you from answering a considerable amount of confused questions.
