Finances and Taxes

Why You Should Consider Paying Your Employees Every Week

Tomer London Co-Founder & CPO, Gusto 

Tens of thousands of businesses run payroll through Gusto today. We’re excited to share that weekly payroll has been growing in popularity among our customers. We believe offering weekly payroll—at no extra cost—makes life better for millions of employees in the US.

Why is weekly payroll important?

To answer that, we have to give a little background on how wages are paid in the United States.

Most companies run payroll either semi-monthly (twice per month, for example, every 15th and 30th) or biweekly (every two weeks, for example, every other Friday). When you pay your team depends on your preferences.

Retain Your Employees

Generally speaking, employees prefer getting paid more frequently because it’s the best alignment of work and earnings.

Hourly employees, in particular, prefer getting paychecks weekly. Weekly payroll better matches an hourly employee’s cash flow needs. If an hourly employee has an irregular working schedule with overtime, weekly payroll best reflects the compensation she’s earned. For example, if an employee works 60 hours one week and 20 hours the next, weekly payroll makes sure the employee is paid that valuable overtime in the first week when she may need it most.

Weekly payroll also allows newly hired employees to be paid more quickly. (That’s a win for employee happiness!) Combine this with a Monday start date for new employees and you can avoid the admin work that comes with prorating a paycheck.

Frequent, reliable cash flow is a good thing. If you’re in a competitive industry, or an industry with high turnover, weekly payroll could help you to attract and retain employees.

Be An Industry Leader

Industries with cash flow that revolves more on a weekly rather than monthly basis—such as restaurants and construction—also benefit from weekly pay periods. It’s a cash flow win for both the employer and the employee.

We are inspired by employers who care about the financial welfare of their employees because we think these builders make stronger, longer-lasting businesses. One such business is Rockwall, Texas-based San Martino Winery & Vineyards. Owner Emilio Ramos articulates:

We prefer weekly payroll due to having mostly hourly employees. It is easier on their finances and cash flow.”

Simplify Your Budget and Improve Cash Flow

Unfortunately, most companies don’t offer weekly pay periods even if their employees would benefit from it. One of the most prohibitive reasons is cost. Most payroll vendors charge each time payroll is run. If you have dozens of employees on weekly schedules, these fees can add up. Fortunately, Gusto never charges per payroll run; we have a transparent, flat monthly fee per employee.

The reality is a bi-weekly payroll can actually throw off your company’s cash flow. With fifty-two weeks per year, there are twenty-six bi-weekly pay periods, with two months per year having an additional third pay run that. All too often, those outlier pay periods aren’t included in the budget, which can lead to cash flow problems. The year 2021 actually has 53 Fridays, which means a business that runs bi-weekly payroll could have twenty-seven pay periods. That’s three months with an additional pay run to fit into their budget.

Standardize Your Processes

Another stumbling block for weekly payroll is time. Each time you run payroll, it can take up a lot of time for you or your payroll administrator, especially if there are payroll accruals and overtime. Gusto has a number of features built in to make this a simple process. Gusto offers time tracking that is reviewed and approved inside the software itself. If you have standard hours, Gusto will even process the payroll for you with our AutoPilot feature, creating a hands-off experience. We even integrate directly with most major accounting software.

Weekly payruns also encourage employees to turn in their timesheets in a consistent and timely manner. You’re less likely to have employees who forget to update their timesheets on the “off” weeks if you pay weekly. This means less time spent tracking down missing hours at the last minute. Having weekly payruns on the calendar weekly standardizes and simplifies your payroll process so you can go back to running your business!

Sharlane Chase from Seattle-based My Buddy Dave the Plumber explains:

In the trades (construction, plumbing, electrical), it’s typical for workers to get paid weekly. Historically, in the construction industry, people can get burned. Projects can sometimes go belly up and workers don’t get paid, so people get nervous. People come in, they do the work and at the end of the week, they get the pay and they go. That’s the way it’s always been done.

We strongly believe employees deserve to be paid promptly and without complications. Weekly payroll accomplishes this for tens of millions of hourly workers, and with Gusto’s time tracking features, Autopilot capabilities, and accounting integrations companies are enabled to do that without any extra effort or cost.

Unfortunately, most companies don’t offer weekly pay periods even if their employees would benefit from it. One of the most prohibitive reasons is cost. Most payroll vendors charge each time payroll is run. If you have dozens of employees on weekly schedules, these fees can add up. Fortunately, Gusto never charges per payroll run; we have a transparent, flat monthly fee per employee.

Another stumbling block for weekly payroll is time. Each time you run payroll, it can take up a lot of time for you or your payroll administrator, especially if there are payroll accruals and overtime. Gusto handles all this for you with our AutoPilot feature so you can go back to running your business!

This is especially true for certain industries. Sharlane Chase from Seattle-based My Buddy Dave the Plumber explains:

In the trades (construction, plumbing, electrical), it’s typical for workers to get paid weekly. Historically, in the construction industry, people can get burned. Projects can sometimes go belly up and workers don’t get paid, so people get nervous. People come in, they do the work and at the end of the week, they get the pay and they go. That’s the way it’s always been done.

We strongly believe employees deserve to be paid promptly and without complications. Weekly payroll accomplishes this for tens of millions of hourly workers, and AutoPilot enables companies to do that without any extra effort or cost.

The Gusto Guide to Payroll Periods

Gusto-Payroll-Periods
Tomer London
Tomer London Tomer is the co-founder and Chief Product Officer of Gusto. He is responsible for the development and execution of the product vision — reimagining how modern payroll, benefits, and compliance should operate.

Comments

  • Darryl

    I’ve been working as a mechanic for a trucking company almost two years now that pays biweekly and it has been nothing but trouble. If they make a mistake it could take two or more pay periods to be corrected. On the weeks you don’t get paid you don’t really have anything to look forward to so you may not be as productive. The only one who benefits from this trick is the employer…period! I’m searching for a new employer that pays weekly. These companies don’t care about their employees if they are paying anything other than weekly.

    Reply
  • Angel

    This is beautiful and very benefiting to know. I believe that every hourly employee deserves to get compensated weekly. Everyone agrees with me that playing employees weekly gives them a chance to pay bills on time rather then having to budget and feel like they have no job. Semmimonthly is a really bad idea and only benefits employers not the poor workers who make it all happen. God bless and great job with Gusto. I will try to introduce gusto to my employer who pays us semmimonthly because bills are due and they are to be paid on TIME. Please pray for us.

    Reply

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