A pay schedule is a combination of the following two items:
- A pay period - The date range for which work is actually completed by the employees.
- A check date - When the employees receive payment. For weekly or biweekly payrolls, the check date will always fall on the same day of the week. For twice per month or monthly payrolls, the check date will not fall on consistent days. If it falls on a weekend, it will be pushed up to the next closest business day.
Determined by the employer, the pay schedule provides a regular cadence for tracking work and allows employees to plan their own finances around when they will receive payment.
Be sure to check state laws to know what schedule is right for your customers.
ACH processing timeline
ACH (automated clearing house) is the national standard for transferring money through US banking. It is important to note that there is a delay between when a payroll is submitted and when the employees will be paid in accordance with that standard.
- Four business day rule - The designated processing time is four business days. This means that payroll must be submitted four business days prior to the check date in order to ensure employees are paid on time.
- Expedited two business day rule - Gusto offers expedited payroll to qualifying companies which allows them to submit payroll only two business days prior to the check date in order to ensure employees are paid on time.
Since the ACH processing timeline is calculated off business days, we must also make sure to consider bank holidays since funds won’t move on those days. Any time a bank holiday falls within the two or four day processing window, payroll must be submitted one business day earlier. Bank holidays are already factored into pay schedules, so if a bank holiday interrupts the standard 2-day processing timeline, the payroll deadline will already be adjusted to account for this. The Federal Reserve lists all bank holidays a few years in advance.
Gusto’s internal cutoff time
Gusto’s requires that payroll be submitted by 4 pm PST each business day in order to begin processing that day, which allows us time to actually process all payrolls on our platform. If payroll is submitted after that deadline, it will not be initiated until the following business day, which will push the check date back one business day.
Arrears vs non-arrears
- Arrears simply means there is a delay between the check date and the end of the pay period. This most typically applies to employers with hourly employees, allowing a buffer to obtain hours worked before submitting the payroll.
- Non-arrears means the employees are paid on or before the end of the pay period, which most typically applies to salaried employees since payroll will need to be submitted prior to the end of the pay period, in accordance with the ACH standards.
Remember, payroll will always need to be submitted two or four days prior to the check date! You will want to tie the submission date of payroll to the check date. If an employer misses the deadline, the check date will need to be adjusted back for each business day late. That being said, if an employer submits a payroll early, it should not be initiated until two or four business days prior, meaning the employees will still be paid on the designated check date.
Updated 3 months ago