2026 Brings Payroll Glitch for Salaried Employees: What All Employers Need to Know

Many employers pay salaried and hourly employees on a biweekly schedule, which usually results in 26 pay periods per year. In 2026, paying salaried employees on a biweekly schedule, could cause some employers to issue 27 biweekly payrolls, depending on how their payroll calendar falls.

This anomaly occurs roughly every decade due to leap years and the fact that a 365-day year does not divide evenly into 14-day pay cycles. But while the cause is simple, the consequences for employers can be anything but.

If your organization hasn’t considered whether you will have a 27-pay-period cycle in 2026, now is the time to do so.

Why 2026 May Have 27 Pay Periods

Employers that issued a biweekly paycheck at the beginning of the year could include a schedule with a paycheck on Friday, January 2, 2026, and on Thursday, December 31, 2026, because Friday, January 1, 2027, falls on a holiday. That calendar alignment creates 27 biweekly pay dates in 2026 instead of the usual 26.

For hourly employees, this typically does not create major issues as they are paid an hourly rate for all hours worked. However, for salaried, exempt employees who are typically paid a set amount each pay period, the impact can be significant if not addressed correctly.

Here are a few things employers should consider and need to know:

1. Overpaying Salaried Employees

The most common and costly mistake employers can make in a 27-pay-period year is unintentionally overpaying salaried exempt employees.

Here’s an example to demonstrate how this could happen:

• An employee earns an annual base salary of $52,000.
• That salary is typically paid by dividing the salary into 26 paychecks of $2,000 each.
• If the employer issues 27 paychecks without adjustment, the employee will receive $54,000 for the year.

That’s a roughly 3.85% increase in base salary for that employee before accounting for payroll taxes, retirement contributions, bonuses tied to base pay, or other benefit costs. Multiplied across departments or the organization, this can meaningfully affect labor budgets and cash flow.

Just skipping the last pay period and making only 26 payments isn’t the quick solution because once an exempt employee has performed work during a workweek, employers generally cannot withhold or skip a paycheck to “true up” the salary later.

An employer can adjust bi-weekly salary payment amounts to take into account the extra pay period in 2026, but this creates additional considerations as noted below.

2. The Salary Basis Rules Still Apply

Under the Fair Labor Standards Act (FLSA), most exempt employees must be paid on a salary basis, meaning they receive a predetermined amount each pay period regardless of the number of hours worked. That amount generally cannot be reduced below the specified minimum salary threshold except in limited circumstances.

Employers should also remember:

• The federal minimum salary threshold is $684 per week, but state laws may impose higher thresholds or different exemption rules.
• Improper pay reductions can jeopardize an employee’s exempt status and expose employers to overtime liability.

Additionally, any changes in bi-weekly salary payments should be communicated to affected employees in order to explain the rationale for the change.  In some states, prior written notice and acknowledgement may be required.  Regardless, employees will need to understand why this is occurring and that their annual base salary is not being reduced.

3. Benefit Contributions, Deductions, and Annual Limits

A 27-pay-period year can also create complications beyond bi-weekly salary payments, including:

• Over-withholding or over-contributing to benefit programs with annual IRS limits, such as FSAs, HSAs, and 401(k) plans
• Health insurance premium deductions that exceed annual plan amounts
• Payroll system errors that compound across multiple benefit elections

These issues often surface late in the year when corrections are more difficult. Ignoring benefit plan limits can result in compliance or tax issues that no employers want to face.

Conclusion

Even with 2026 already underway, it is not too late to act. Employers should review their 2026 payroll calendar to determine if this issue applies to their payroll cycle.  If yes, employers should decide on an approach that works for their organization, communicate this decision and related actions clearly with affected employees, and audit benefit plans to ensure compliance and annual limits. Addressing the issue early allows organizations to manage costs, maintain compliance, and set clear expectations with employees. If you have questions about how a 27-pay-period year affects your workforce, payroll practices, or wage-and-hour compliance, reach out to our employment team for assistance today.