Guest Perspective: 2026 brings 27-paycheck challenge for employers | New Orleans CityBusiness

For employers operating on a biweekly payroll schedule, 2026 is not quite business as usual. This year brings an uncommon payroll wrinkle: for many companies, the calendar will produce a 27th payday. It’s the kind of technical detail that can easily be overlooked, but it carries real implications for budgeting, employee communication, and wage-and-hour compliance. For employers who have already begun issuing paychecks based on a 26-pay-period assumption, there is still time to evaluate options and make adjustments going forward.

Under a standard biweekly system, employees are paid every two weeks, resulting in 26 paychecks in most years. The catch is that 26 pay periods cover only 364 days, leaving an extra day (or two in leap years) outside the normal payroll cycle. Over time, those stray calendar days add up to an entire additional two-week pay period, creating an “extra paycheck” year roughly every decade.

2026 is one of those years. If your first payday fell on Friday, January 2, your last payroll may land on Thursday, December 31, since January 1, 2027 is a holiday. That small shift produces an additional payroll cycle. If employers do not budget for it, payroll expenses could end up nearly four percent higher than expected.

The key question is how employers respond.

Some employers may choose to absorb the cost and issue the extra paycheck at the usual rate. That approach is straightforward, but expensive. For example, in a typical year, an employee earning $78,000 annually would receive 26 equal biweekly checks of $3,000. But in 2026, if the employer issues 27 identical checks, the employee receives an unintended additional $3,000. Multiply that across a workforce, and the financial impact adds up quickly.

Other employers may spread annual salaries across 27 checks rather than 26, slightly reducing each paycheck while keeping total annual compensation unchanged. This approach could expose employers to overtime liability. Under the Fair Labor Standards Act, to be exempt from overtime, most employees must be paid at least a minimum guaranteed salary each week – currently $684.  If a per-paycheck reduction causes an employee’s weekly pay to fall below that threshold, the exemption could be lost, potentially making the employee eligible for overtime pay. Employers taking this approach should also be mindful of compliance obligations beyond federal law. While Louisiana generally does not impose advance notice rules for this type of pay adjustment, multi-state employers should confirm whether notice is required in other jurisdictions.

Payroll changes can also affect benefits administration. Health insurance premiums, retirement contributions, FSAs, and HSAs are often structured around annual limits or fixed deduction schedules. A 27th pay period may require adjustments to prevent over-withholding or exceeding contribution caps.

The good news is that the 27-paycheck year is manageable. Reviewing the 2026 payroll calendar now, modeling the budget impact, coordinating with benefits administrators and counsel, and communicating clearly with employees can prevent confusion and reduce compliance risk. If handled proactively, the 27th paycheck can be a manageable adjustment – not a year-end compliance headache.

Ellie George, an attorney with Liskow in New Orleans, advocates for employers in complex labor, employment, commercial, civil, and high-stakes criminal matters, guiding clients through contentious HR issues, employment litigation and agency proceedings, regulatory compliance, internal investigations, and policy development across multiple industries. She can be reached at 504-556-4182 or [email protected].