27 Pay Periods in 2026: 5 Things Every Employer Should Do Now

It doesn't happen often (roughly once every 11 to 12 years), but when it does, it can quietly create compliance issues, budget surprises, and employee confusion if you're not prepared.

Here's what's happening, why it matters, and what to do about it.

Why 2026 Has an Extra Pay Period

Bi-weekly payroll runs on a 14-day cycle. In most years, that adds up to 26 pay periods. But because of how calendar days fall, and the fact that January 1, 2027 is a federal holiday, many employers who use Friday as their pay date will need to shift that final payday to Thursday, December 31, 2026. That shift places an extra paycheck inside the 2026 calendar year, bringing the total to 27.

It's a small calendar quirk, but the downstream effects are anything but small.

What's Actually at Risk

FLSA Exempt Status

This is where employers most often get tripped up. Under the Fair Labor Standards Act (FLSA), employees classified as exempt under executive, administrative, or professional (EAP) exemptions must receive a fixed salary that meets a minimum weekly threshold, currently $684 per week.

If you simply divide an employee's annual salary by 27 instead of 26, their per-paycheck amount drops. For some employees, that drop can push their effective weekly pay below the FLSA threshold, which means they could lose their exempt status without anyone realizing it.

Benefits Contributions

Payroll deductions for health insurance, HSAs, FSAs, retirement accounts, and voluntary benefits are all tied to pay cycles. An extra cycle can throw off annual contribution totals, cause employees to exceed plan limits, or create mismatches in what was deducted versus what was intended.

Most employers handle this by stopping benefits deductions after the 26th paycheck and running the 27th as a salary-only cycle, but that has to be a deliberate, communicated decision, not an afterthought.

The Two Approaches Employers Are Taking

1. Pro-Rated Adjustment: Divide annual salaries by 27, so each paycheck is slightly smaller and total annual pay stays the same. It keeps costs predictable but means employees take home a little less per period. Most employers using this method stop benefits deductions after the 26th cycle.

2. Pay Cycles as Usual: Keep the standard 26-cycle paycheck amount and simply issue a 27th check on December 31. Employees effectively get a bonus paycheck, but employers absorb the added cost. This approach is simpler to communicate but requires budget planning ahead of time.

Neither approach is universally right. It depends on your workforce size, budget flexibility, and how your exempt employees' salaries stack up against FLSA thresholds.

What to Do Right Now

1. Audit your 2026 payroll calendar. Confirm whether you're running 26 or 27 pay periods this year. If your first paycheck of 2026 went out on Friday, January 2, you're likely looking at 27 total pay dates.

2. Check your exempt employees' weekly pay under both scenarios. Run the math for anyone near the FLSA threshold, or your state's equivalent, to make sure a divided salary doesn't accidentally knock them out of exempt status.

3. Review benefits deductions. Work with your benefits administrator to confirm contribution totals won't exceed annual limits under a 27-cycle schedule.

4. Communicate with your employees. People notice when their paycheck looks different. Get ahead of it with a simple explanation of what's changing and why.

5. Don't make mid-year changes. Switching approaches partway through the year creates both compliance risk and employee relations headaches. Decide now and stick with it.

How Brand's Can Help

A 27-pay-period year isn't a crisis, but it does require attention to detail. Brand's Payroll helps employers review their payroll calendar, verify FLSA compliance, and make sure every configuration is set correctly before a problem shows up in someone's paycheck.

Let's talk before December gets here.