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State law dictates your payroll frequency

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in Small Business Tax Deduction Strategies

Q. Is it legal to adopt a once-a-month payroll for hourly employees? What other issues come up with a monthly payroll? —J.S., California

A. Federal wage-and-hour law doesn't specify how often you must pay your employees. But many states set up their own pay-frequency laws that require semimonthly or even weekly pay in certain cases. California law, for example, says you must pay nonexempt workers semi-monthly and exempt employees at least monthly.

For pay-frequency rules in all the states, check with state labor departments or visit taxinfo/state_payfreq.html.

Keep in mind that paying workers less frequently may be administratively convenient for your company, but it can be a big issue from a recruitment, retention and morale perspective, especially if you employ lots of lower-wage, hourly employees.

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