27th Pay Date Frequently Asked Questions

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VIDEO OVERVIEW

GENERAL QUESTIONS

QUESTIONS ABOUT SPECIFIC SITUATIONS

BIWEEKLY PAY CALCULATOR (for salaried faculty and staff paid over 12 months) (xlsx)

Video Overview

General Questions

Question: What are the main points I should know about the 27th pay date?
Answer:
FISCAL YEAR 2021 (July 1, 2020–June 30, 2021):

  • Any payroll cycle that pays every two weeks (biweekly) results in an extra pay date in a fiscal year every 11 years. This will next occur at the University of Minnesota in fiscal year 2021 (July 1, 2020–June 30, 2021).
  • All employees paid over 12 months will get an extra paycheck in fiscal year 2021, and three months in the fiscal year will have three paydays.
  • Faculty and P&A staff paid over 12 months will have their promised annual salary divided by 27—rather than the typical 26—to account for the 27 pay dates in fiscal 2021. Because of this change, they will see a slight reduction in their biweekly amount of pay from what it would have been if divided by 26. However, they will also receive an extra paycheck during the fiscal year, so their annual salary remains the same and is paid in full.
  • Employees paid hourly (including Labor Represented and exception-hourly Civil Service) will not see any difference in FY21 except for the extra pay date.
  • Employees paid a salary over 9 or 10 months will not see any change in their FY21 biweekly gross or net pay amounts due to the extra pay date. They will continue to be paid as in any other fiscal year.

CALENDAR YEAR 2020

  • Coincidentally, there are also 27 pay dates in the calendar year 2020, with an extra paycheck on December 30, 2020.
  • The only effect this will have for employees is on how four payroll deductions are taken during the calendar year, beginning with your January 2, 2020, paycheck. See "Will this affect my payroll deductions?" below for more information.

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Q: Why is there an extra pay date?
A: Most fiscal years (July 1–June 30) have 26 pay dates. However, with a biweekly payroll schedule, approximately every 11 years there are 27 pay dates in a fiscal year. This is because, similar to a leap year, over time the 26th pay date shifts a little earlier each year until the point that an additional pay date occurs in a fiscal year. Roughly every eleven years, both July 1 and the following June 30 are pay dates, resulting in 27 pay dates in that fiscal year.

Q: How will the 27th pay date affect Faculty and P&A staff?
A: Faculty and P&A paid over 12 months: Salaried employees have a set annual salary for your appointment period that is based on the fiscal year calendar. Every year, your annual salary is delivered biweekly, divided by the number of pay dates in the fiscal year. Typically, that number is 26. However, in FY21 there will be 27 pay dates, so from July 1, 2020, to June 30, 2021, each pay date you will receive 1/27th of your annual salary instead of 1/26th. Because of this change, you will see a slight reduction in your biweekly amount. However, your annual salary remains the same and you will receive the full amount.

Faculty and P&A paid over 9 or 10 months: Because your appointment term is less than 26 pay periods, you will not see any change in your FY21 biweekly gross or net pay amounts due to the 27th pay date. You will continue to be paid as in any other fiscal year.

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Q: How will the 27th pay date affect employees paid hourly (Civil Service and Labor-Represented)?
A: Each year, biweekly pay for hourly employees (including exception-hourly Civil Service) is calculated by multiplying your promised hourly rate by the number of hours worked during the pay period. This practice will continue, and you will not see any difference in FY21 except for the extra pay date. You will continue to be paid as usual for the hours and overtime you work.

Q: I'm a Faculty or P&A staff member paid over 12 months. How much will my biweekly pay be reduced?
A: During fiscal year 2021, you will receive 1/27th of your annual base salary each biweekly pay period instead of 1/26th. The difference between 1/26th of your base salary and 1/27th amounts to about 3.7% each pay period. (This refers to your base pay only; it does not include other variables, such as taxes, payroll deductions, or additional pay you may receive.)

To illustrate, the chart below shows how a sample $50,000 base salary would be delivered over 26 pay dates compared to a 27–pay date fiscal year. Your own pay amounts will depend on your individual circumstances.

Base Salary*

Biweekly Pay Amount
for 26 Pay Dates

Extra 27th Pay Date
Pay Amount

Total Amount Paid
for the Fiscal Year

$50,000 for FY20

$1,923.07

NOT APPLICABLE

$50,000

$50,000 for FY21

$1,851.85

$1,851.85

$50,000

*Paid over the fiscal year (July 1 to June 30); this figure is before taxes, deductions, or additional pay

To see how the 27th pay date will affect your biweekly pay amount, use this Pay Calculator (xlsx).

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Q: How will this affect my payroll deductions?
A: Though biweekly pay schedules are based on the fiscal year, payroll deductions (such as medical, retirement, parking, and so on) are withdrawn based on a calendar year. In calendar year 2020, payroll deductions will be taken over all 27 pay dates, with just four exceptions. Those exceptions will be taken over 26 pay dates, with no deduction taken on the final pay date of calendar year 2020. If you have one of the four deductions listed below, you may see slight changes in the withholding starting on the January 2, 2020, pay date.

  • Community Fund Drive recurring contributions for the Crookston, Duluth, and Twin Cities campuses
  • Life insurance (additional employee life, spouse life, and child life insurance)
  • Long-term disability insurance
  • Short-term disability insurance

For employees on 9- or 10-month appointments, deductions will continue to be taken as usual: Any missed deductions when they are not on appointment will be taken when they return to work.

Starting in calendar year 2021, all payroll deductions will return to the usual amounts taken in a 26-payday year.

Q: How will this affect my taxes?
A: Remember, your tax year is a calendar year. Salaried employees may see slightly higher earnings on their W-2 for calendar year 2020 and slightly lower earnings for calendar year 2021 because for half of each calendar year, salaried employees will receive 1/26th of their salary each paycheck, and for the other half they will receive 1/27th of their salary each paycheck. In addition, calendar year 2020 coincidentally has a 27th pay date on December 30. Taking our example base salary of $50,000, you can see the impact on W-2 earnings* in the chart below:

EXAMPLE
Salaried employee with base salary of $50,000 paid over 12 months

Graphic showing 27th pay date will slightly increase income on sample $50,000 base salary in calendar year 2020, slightly decrease income in 2021 
*Before taxes, deductions, or additional pay, including merit increases

Hourly employees may see slightly higher earnings in calendar 2020 due to the extra pay date.

Q: Who can I contact if I have questions about the 27th pay date or my individual circumstances?
A: Your unit HR representative may be able to answer questions not found here. You can also email or call the OHR Contact Center at ohr@umn.edu or 4-UOHR (612-624-8647; 800-756-2363).

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Questions About Specific Situations

Q: Will the extra pay period be early or late this year?
A: It will actually be both. The first paycheck will be delivered on July 1, 2020, and the last on June 30, 2021, the first and last days of FY21.

Q: Why are my medical and dental deductions coming out of all 27 paychecks in calendar year 2020?
A: Medical and dental rates are calculated based on the projected annual cost for the full calendar year. In 2020, the calculation was determined using all 27 pay dates. The reason for doing this is that it will help reduce large year-over-year swings in the deduction rate for employees. The percentage of the premium that employees will pay will not change.

Q: Why are my life insurance and long-term and short-term disability insurance deductions being taken only 26 times in calendar year 2020?
A: The University must pay its vendors for the coverage they provide over the calendar year according to a contract. The University will reach the annual contracted amount it owes the vendors at the 26th pay date, so an additional deduction will not be taken on the 27th pay date.

Q: How will this affect vacation and sick leave accruals?
A: Vacation and sick leave accruals will continue as usual for each pay period, and balance maximums will remain the same.

Q: How will this affect vacation payout if you are salaried?
A: Vacation payout is based on an employee's annual salary, which is not changing. Therefore, the payout of vacation will not be changed.

Q: Since salaried employees paid over 12 months will see a reduction in biweekly pay, will taxes also be lower each pay period?
A: Taxes are always calculated based on a percentage of the actual pay being received at any given time.

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Q: What happens if a salaried employee paid over 12 months leaves or retires partway through the year?
A: Should you depart the University before the end of fiscal year 2021, you will have been paid the full proportionate amount of your annual salary earned to that date.

Q: I'm a Faculty or P&A employee, paid over 12 months, who earns various types of pay. What parts of my pay will be affected by 27 pay dates?
A: Any pay considered part of your "institutional base salary" will be divided by the number of pay dates in the fiscal year automatically. That includes your base salary and these earning types: academic administrative augmentation (AAA), faculty administrative augmentation (FAA), increments (INCR), and Regents Award (REGENT). If you receive other types of pay, please contact your unit's HR Lead to discuss if the pay frequency will be 26 or 27 in FY21.

Q: Will employees who are paid over 9- or 10-month appointments, and who also have a separate paid summer appointment, have their appointments combined and divided by 27?
A: No. They are handled as separate appointments.

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Q: How will merit pay be applied, since this will happen at the same time as the 27th pay date change for salaried employees?
A: Merit pay is not affected by this process.

Q: Will this affect new hires in fiscal year 2021 who are paid a salary over 12 months?
A: Biweekly pay for new hires will be determined by dividing their annual salary by the number of pay dates in the fiscal year, just as in a year with 26 pay dates. They will be paid that amount for the remaining pay dates in the fiscal year.

Q: How will V class and "no new entry" employees be handled?
A: V class and "no new entry" employees are paid hourly, so they will continue to be paid as usual: the number of hours they work multiplied by their hourly rate. They will not see any change in how their pay rate is displayed on the pay statement.

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Q: How will employees who hit the new FLSA minimum be handled?
A: These employees are moving from being paid a salary to being paid hourly. Therefore, they will be paid for the number of hours they work multiplied by their hourly rate. They will see their hourly rate displayed on their pay statement.

Q: Will retirement contributions to the Faculty Retirement Plan change due to the 27 pay dates?
A: Employee and University contributions to the Faculty Retirement Plan are based on a percentage of your salary, so the paycheck amount will reflect that same portion of your pay.

Q: If I contribute to a voluntary retirement plan, can I switch my contribution from a flat rate to a percentage?
A: Yes, you can change your election from a flat rate to a percentage at any time.

Q: I have set up my contributions to an optional retirement account to reach the maximum allowed amount in 26 pay periods. Do I have to change this to maximize in 27 pay periods, or will it only be collected for 26 pay periods?
A: An employee has the choice to contribute to the voluntary retirement plans each pay period by a flat dollar amount or by a percentage amount. In either case, that amount will be taken from the paycheck over 27 pay dates, or to the paycheck that reaches the annualized 2020 limit. During the calendar year, employees have the option to change their contribution amount.

Q: How does this affect medical residents who see a yearly increase in our salary that does not fall exactly on the beginning or end of the fiscal year? For example, the residency term is July 15, 2019, to July 15, 2022, with our salary increasing by $1,000 each year.
A: Please contact the HR director for the Medical School to understand how the 27th pay date year will affect your specific circumstances given that your appointment year differs from the standard appointment year.

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