Recent lawsuit shows employers right way to make the change
It’s sometimes necessary to change your pay cycle. In this situation, it’s key to proceed with caution.
Along with any compliance and legal issues that may arise due to state prompt-payment laws, you’ll have to address workers’ concerns about their checks.
One company’s pay change was challenged in court, but it followed procedure to the letter and won.
The employees in Wilkinson v. West Virginia (WV) State Office of Governor said that, after their employer changed from a semimonthly pay cycle to a biweekly pay period, they weren’t paid their full salaries for the year.
However, this wasn’t the case. Upon analysis of payroll records, the court found the workers were paid for work done in the previous pay cycle on each payday, so they were paid their full year’s salary by the first payday that fell in the next calendar year.
This was perfectly legal under state law, so the case was dismissed–even after multiple appeals.
Following the regs
Under the Fair Labor Standards Act, pay cycles can be changed as long as the change (1) is permanent (2) is for legit business reasons (3) isn’t made to avoid paying overtime and (4) doesn’t unreasonably delay workers’ pay. State laws may be stricter.
Be sure to consider these factors–and prepare for employees’ questions–for a smooth transition.
Cite: Wilkinson v. WV State Office of Governor, No. 20-0295, Supreme Court of Appeals of WV, 4/20/21.