Leap Year causes small hiccups with some payroll systems

It doesn't sound like too big a deal, but today is special. In fact, it won't happen again until 2032.

Today is also causing payroll managers across the country to sprout a few extra gray hairs this year.

Because Thursday and Friday are the most popular pay days, many companies that pay weekly or biweekly will have 53 or 27 pay days this year.

That might draw a happy response from employees, but they should inspect their paychecks first. Salaried employees might have noticed their pay stubs are a little smaller this year.

That's because some companies divide the annual salary by the number of pay periods to determine weekly pay, Scott Mezistrano, of the American Payroll Association, said.

"So if you were making $1,000 a week, you could be making around $980 this year," he said. "Companies can legally do this, but it's not a good move for morale."

Many companies have decided to just pay the extra money.

The Bonita Bay Group noticed the anomaly earlier this year. After several meetings, executives decided to pay the extra money, even though it will cost the company tens of thousands of dollars, payroll manager Larry Stout said.

"It's not fair to the employees not to pay them," Stout said. "You work the time, you deserve to get paid for it."

Other companies avoid the problem altogether by paying semi-monthly, Mezistrano said.

"If you pay on the 15th and the 31st, then you have no problems," he said.

Lealla Stoutenburg, human resources director for the Hyatt at Coconut Point, said her company uses the every-other-week system, but isn't affected by the problem because its salaried employees are paid a specific amount per week, not per year.

"Our system just cuts a check for the amount every two weeks," she said. "I've heard about the problem, but luckily it's not something we have to deal with."

The extra pay periods have other costs for companies in addition to the extra money being paid out. For example, payroll and accounting software might need updating and budgets could need adjusting.

But the other big issue again comes down in favor of the employees, Mezistrano said.

"Vacation and sick time could also be affected," he said.

For companies that give out vacation time in "clicks" at every pay period, it could mean extra time off for workers.

Again, Mezistrano said companies could adjust the amount per pay period, but that wouldn't exactly instill good will in employees.

"We treat the above-extra pay and extra PTO accrual as an extra benefit for our employees; a benefit they deserve and have earned," Stout said.