In a company that is switching from semi-monthly to bi-weekly payroll (good news), there is the transition period that is tricky.

  • The last paycheck under the old payroll is on Dec 31 covering pay period Dec 15 - Dec 31.
  • The next paycheck under a new payroll comes on Jan 11, and covers a pay period from Dec 24 through Jan 6. So, there is an overlap.

In this new Jan 6 paycheck, employees are paid only for the dates Jan 1 - Jan 6 (since the rest has been paid in the previous paycheck).

However, the healthcare benes deductions are full 2-week amount. The rationale given is that annual benefits are divided by the amount of pay periods in a year and deducted from each paycheck.

I'm not quite getting the math here, and my impression is that healthcare benes deductions should be pro-rated and deducted only for a part of the pay period (Jan 1-6). Am I wrong in my assumptions?

(There is a plan in place to help folks balance their financial commitments during the transition period. It is fair. I am only curious about the logic of misaligned pay and healthcare)

  • Hello Taras and welcome to The Workplace. Have you brought this to the attention of HR? Usually they should be able to answer questions like this, and should have a lot more knowledge of the situation to do so – rath Sep 26 '18 at 13:51
  • VTC - HR/Company specific. – Neo Sep 26 '18 at 14:40

You should check with HR or Payroll to be sure you understand your deductions.

However, what they are saying does make sense. They need to collect a known amount for health care over the year. There are at least two ways they could distribute that among paychecks.

One, which seems to be what you would prefer, would be to do it per day of work paid in that paycheck. That would result in a smaller deduction on partial period paychecks, and larger on ones that cover the full two weeks.

The other is to divide it by the number of paychecks for the year, and deduct that fixed amount from each one, regardless of the number of days covered. That seems to be what they are doing.

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    There is a slight disadvantage for people who leave partway through the year, who have paid slightly more than the amount of benefit they have received. But it's very slight. – DJClayworth Sep 26 '18 at 14:17
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    @DJClayworth Some businesses balance that sort of thing out in the final paycheck when an employee leaves. What that particular business does is a question for their HR and/or Payroll people. – Patricia Shanahan Sep 26 '18 at 14:18
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    That's a good point. – DJClayworth Sep 26 '18 at 14:21
  • This seems like the flaw would be that if a partial pay period (for example a single day) might not cover the cost of the deduction, and I've never heard of a negative paycheck without fault. – Vality Sep 27 '18 at 21:51

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