Why Is Semi-Monthly Pay 86.67 Hours?
Learn why 86.67 hours is the standard for semi-monthly pay, and how it ensures consistent salary distribution.
Semi-monthly pay means employees receive their earnings twice within a calendar month, resulting in 24 paychecks annually. Payments typically occur on fixed dates, such as the 15th and the last day of each month, or the 1st and the 15th. Many salaried employees wonder why their semi-monthly paychecks are based on 86.67 hours instead of 80 hours. This specific hourly figure ensures consistent compensation across varying monthly workdays.
Understanding Different Pay Periods
Employers utilize various pay frequencies to compensate their workforce. Weekly pay periods provide compensation once every seven days, resulting in 52 paychecks annually. Bi-weekly schedules disburse pay every two weeks, leading to 26 pay periods over a year. This frequency is a common choice, balancing regular income and administrative processing for many businesses.
In contrast, monthly pay periods involve a single payment each month, totaling 12 paychecks per year. Semi-monthly pay provides 24 paychecks annually, with payments typically falling on consistent dates within the month, such as the 1st and 15th or the 15th and the last day. These fixed dates mean the time span between paychecks can vary slightly, ranging from 14 to 16 days, depending on the month’s length and weekend/holiday adjustments. This consistency in pay dates, rather than consistent intervals of days, distinguishes semi-monthly from bi-weekly schedules.
The Calculation Behind 86.67 Hours
The calculation of 86.67 hours for a semi-monthly pay period stems from the standard 40-hour work week. This standard is based on an eight-hour workday, five days a week. To determine the total annual working hours for a full-time employee, this weekly figure is multiplied by the 52 weeks in a year, yielding 2080 hours (40 hours/week 52 weeks/year = 2080 hours/year).
For employees paid semi-monthly, their total annual salary is distributed across 24 pay periods. To find the average number of hours each semi-monthly paycheck represents, the total annual working hours (2080) are divided by the 24 pay periods. This results in 86.666… hours (2080 / 24 = 86.666…), which is rounded up to 86.67 hours. This mathematical approach ensures a salaried employee’s annual compensation is evenly spread across all pay periods, regardless of the actual number of workdays in any given half-month.
How 86.67 Hours Impacts Your Paychecks
The use of 86.67 hours in semi-monthly pay directly influences the consistency of an employee’s gross pay. For salaried individuals, this standardized figure means each of their 24 paychecks will be for the same gross amount, providing predictability for personal financial planning. This consistency is maintained even though the actual number of workdays within a semi-monthly period can fluctuate, for instance, some periods may have 10 workdays while others have 11 or more. The 86.67-hour figure effectively averages out these variations over the entire year.
Payroll systems use this averaged hourly equivalent to distribute the annual salary evenly, simplifying administration for employers and ensuring a steady income stream for employees. This contrasts with hourly pay, where compensation varies based on the precise number of hours worked in each specific pay period. The 86.67-hour calculation provides a reliable framework for managing salaried payroll and supports predictable budgeting for both the company and its employees.