A semi-monthly pay schedule means employees are paid twice each calendar month, for a total of 24 pay periods per year. It sounds simple until the payday falls on a Sunday, a workweek is split across two pay periods, or an hourly employee asks why this check is smaller than the last one.
This article explains how semi-monthly payroll works and what employers should weigh before adopting it: fixed pay dates, the differences between salaried and hourly administration, how overtime is calculated, payroll processing deadlines, and the state rules that govern payday timing. Whether you're setting up payroll for the first time or considering a switch, the details below will help you decide if paying twice a month fits your business.
Simply put, a semi-monthly pay schedule pays employees twice per calendar month, resulting in 24 paychecks per year. Most employers choose fixed pay dates, commonly the 1st and 15th or the 15th and last day of the month, though other dates are allowed as long as the schedule complies with applicable wage-payment laws.
It’s easy to confuse semi-monthly and biweekly pay schedules, so let’s be clear: semi-monthly means pay twice per month and biweekly means pay every two weeks. The two schedules diverge in other ways, but we’ll address those later in the article.
Another pay schedule concept to understand is timing, and that starts with two terms. The pay period is the span of days when wages were earned, and the pay date is the day employees actually receive those wages. They don’t typically land on the same day.
Why the gap between them? Most employers pay in arrears, meaning wages are paid after the pay period closes. Payroll teams need that buffer to collect timesheets, approve hours, review overtime and variable pay, process changes, and fund the payroll.
Here's how those pieces fit together in practice:
MARCH
Notice that March 20 could fall on any day of the week. Because pay dates are tied to calendar dates instead of weekdays, they land on different days throughout the year, including weekends and holidays, so payroll calendars and cutoff deadlines need to account for processing time and banking days.
One more wrinkle: semi-monthly pay periods also vary in the number of calendar days and workdays from one period to the next. That matters most for hourly payroll, as the next section shows.
Semi-monthly pay is calculated differently for salaried and hourly employees, and overtime follows its own rules, too. Let’s review examples of each to better understand the variations.
Exempt employees are those not entitled to overtime pay under the Fair Labor Standards Act (FLSA). To qualify, an employee generally must be paid a fixed salary that meets the U.S. Department of Labor's minimum salary level and perform job duties that pass the applicable duties test. Common exemptions cover executive, administrative, and professional roles.
Here is how semi-monthly payroll is applied to salaried exempt roles:
Formula: Annual salary ÷ 24 = gross pay per semi-monthly paycheck
Example: $72,000 ÷ 24 = $3,000 in gross pay per regular paycheck, before taxes and deductions
You'll often see 86.67 hours cited as the hours in a semi-monthly period. That figure comes from 2,080 annual hours ÷ 24 pay periods. It's an annualized reference point for a 40-hour schedule, not the actual hours worked in any given period.
Nonexempt employees are entitled to overtime pay (1.5 times their regular pay) for any hours worked beyond 40 in a single workweek under the FLSA. For them, the math follows the clock, not the calendar.
Formula: Actual regular hours worked × hourly rate, plus overtime and other eligible earnings
Semi-monthly pay periods contain anywhere from 13 to 16 days, and the number of workdays varies, too. That's why employers should never automatically pay hourly employees for 86.67 hours each paycheck. Pay what the timesheets show.
An arrears schedule helps here. When payroll closes after all hours are known, you avoid projecting hours and issuing corrections later.
Accurate hours solve most of the hourly equation, but they raise the question every semi-monthly employer eventually faces: what happens to overtime when pay periods ignore workweeks?
Federal overtime for covered, nonexempt employees is determined by the workweek, not the pay period, according to the U.S. Department of Labor. A workweek is a fixed, recurring period of 168 hours (seven consecutive 24-hour days) that the employer defines.
Because semi-monthly pay periods follow calendar dates, a single workweek can start in one pay period and end in the next. Your timekeeping and payroll systems must preserve weekly overtime calculations even though payroll runs twice a month.
Example: It may seem like overtime applies after 80 hours in a 2-week period, but that’s incorrect. Overtime applies when an employee works over 40 hours in a single workweek.
Week 1: 45 hours (+5 hours of overtime)
Week 2: 35 hours
Total: 80 hours
Employee is owed 5 hours of overtime.
State overtime rules can add requirements beyond the federal standard, such as daily overtime, so verify the rules wherever your employees work. Getting the calculations right is one thing; picking the right schedule in the first place is another, and that starts with the biweekly comparison.
Biweekly payroll pays employees every two weeks on the same weekday, producing 26 paychecks per year. Semi-monthly payroll pays on two fixed calendar dates, producing 24. According to the U.S. Bureau of Labor Statistics, as of February 2023, biweekly was the most common frequency, used by 43% of private establishments, while about 20% paid semi-monthly. Popularity aside, the right choice depends on your workforce.
Semi-monthly may be better when you have:
Biweekly may be better when you have:
Weekly payroll pays employees every week, producing 52 paychecks per year, and is common in construction and other hourly-heavy industries. Monthly payroll pays once per month, producing 12 paychecks, and is the least common option; several states restrict it to certain employee classifications. Whichever frequency is on the table, weigh the pros and cons of semi-monthly before committing.
Generally, a semi-monthly pay schedule fits well with business cycles. It integrates smoothly with monthly accounting, budgeting and forecasting, cash flow management, and performance evaluation. This helps companies maintain stability, consistency, and efficiency in their payroll processes.
Those advantages are real, but they come with trade-offs that hit hardest on the hourly side of your workforce.
Semi-monthly pay periods require careful attention to detail and effective payroll management. Complexities include varying workdays, overtime calculations, scheduling challenges, accruals, deductions, and compliance requirements. Challenges generally arise from:
That last item deserves its own section, because pay frequency rules are more state-specific than most guides let on.
Before adopting or changing a semi-monthly schedule, employers should verify six compliance areas.
Pay frequency rules change, so confirm current federal, state, and local requirements with an HR expert or the relevant regulatory agency before making changes. If that list feels like a lot to manage alongside running a business, that's exactly the problem a PEO exists to solve.
A semi-monthly pay schedule delivers 24 predictable pay periods a year and pairs naturally with monthly accounting, but it demands disciplined overtime tracking, a solid payroll calendar, and state-by-state compliance awareness.
For more than 45 years, FrankCrum has handled exactly that work as a professional employer organization (PEO), a firm that takes on payroll, HR, and compliance responsibilities for client businesses.
FrankCrum's payroll and tax services process semi-monthly, biweekly, and weekly payrolls with the workweek-level overtime tracking hourly teams require, backed by HR management support that keeps pay practices aligned with state rules. Whatever schedule fits your business, you don't have to administer it alone.
Is semi-monthly the same as twice a month?
Yes. Semi-monthly means employees are paid twice per calendar month, typically on fixed dates such as the 1st and 15th or the 15th and last day of the month. It is not the same as biweekly, which means every two weeks and produces 26 paychecks per year instead of 24.
How many pay periods are in a semi-monthly pay schedule?
A semi-monthly pay schedule has 24 pay periods per year: two in every calendar month. Unlike biweekly payroll, which occasionally produces a 27th pay period, semi-monthly payroll always yields exactly 24, which makes annual budgeting and deduction schedules more predictable for employers.
How many hours are in a semi-monthly pay period?
There is no fixed number. Semi-monthly pay periods run 13 to 16 days, so work hours vary by period. The commonly cited 86.67 hours is simply 2,080 annual hours divided by 24 pay periods, an annualized reference for a 40-hour schedule. Hourly employees must be paid for actual hours worked, not an average.
How is overtime calculated on semi-monthly payroll?
Under federal law, overtime for nonexempt employees is calculated by the workweek, not the pay period. Employers must track each defined workweek separately, even when a workweek spans two semi-monthly pay periods, and pay overtime for hours over 40 in any single workweek. Weeks cannot be averaged together, and some states add stricter rules.
Can an employer switch from biweekly to semi-monthly payroll?
Generally, yes, but employers should first confirm state payday frequency rules, provide employees advance written notice where required, and ensure all wages earned under the old schedule are paid. A clean transition also includes updating payroll software, deduction schedules, the payroll calendar, and the employee handbook before the first new cycle runs.
What happens when a semi-monthly payday falls on a weekend or holiday?
Because semi-monthly paydays are tied to calendar dates, they regularly land on weekends and bank holidays. Most employers adopt a written policy to pay on the preceding business day. Employers should verify whether state law dictates when wages must be available and apply the policy consistently.
Does semi-monthly payroll change taxes or benefits?
It changes the timing, not the totals. Annual wages, taxes, and benefit costs stay the same; they are simply divided across 24 pay periods instead of 26 or 52. Per-paycheck withholding and deduction amounts differ from other schedules, so payroll systems and benefit deduction schedules must be configured for 24 periods.