Leap Year’s Impact on Compliance Requirements in 2024
January 29, 2024
Leap Year’s Impact on Compliance Requirements in 2024

In 2024, leap day will occur on Thursday, Feb. 29. A leap year can create administrative and compliance challenges for organizations every four years. For example, a leap year can impact payroll processing or tax reporting obligations by adding an extra payday to the year. This can increase the number of pay periods from 26 to 27 for employees paid biweekly or from 52 to 53 for employees paid weekly, potentially altering how employees are paid. As a result, it’s essential that employers understand their compliance obligations and assess how an extra day in 2024 may impact any compliance requirements and deadlines.


This article explores how the 2024 leap year can impact compliance deadlines and how employers can proactively prepare and navigate any potential changes. However, the compliance considerations presented in this article are only examples. Employers should consult with their legal counsel to address any specific issues.


Payroll Considerations

Adding an extra day in February 2024 can create an additional pay period for employees who are paid on a weekly or biweekly basis. In 2024, there will be 53 Mondays and 53 Tuesdays. Therefore, weekly or biweekly salaried employees paid on either of these days will have an extra pay period. However, salaried employees paid monthly or semimonthly and employees paid hourly will not be impacted.


When faced with an extra pay period, most employers decide not to change how they pay employees each pay period despite the additional cost. As a result, impacted employees receive an additional pay period for the year, resulting in slightly higher salaries. Other organizations may opt to change their pay frequency or date to account for a leap year.


Some employers may decide to keep employees’ total annual salary the same but spread it out over the entire year. Employers can do this by counting the number of pay periods that will occur during the year and adjusting employee paychecks to account for an extra pay period. However, because of the extra pay period, employees would receive slightly less each paycheck, even though their total annual salary will remain the same. This can create confusion or negatively impact employees unless employers explain ahead of time why workers will receive slightly less each pay period, allowing employees time to prepare. Additionally, employers can explain that an extra pay period may impact employee deductions for benefits and contributions to retirement or health savings plans.


IRS tax withholding requirements do not change when there’s an additional pay period during the year. Therefore, employers must adjust their withholding calculations to ensure they withhold sufficient federal, state and local income taxes. To help avoid errors and ensure accurate payroll calculations, employers can review their payroll systems to ensure they can address leap-year payroll correctly. This can include accounting for an additional pay period, if applicable; withholding taxes correctly; and reviewing pay dates so employees are paid on time. Organizations can also prepare for an additional pay period by ensuring proper budgeting and cash flow to avoid any issues.


Benefits Considerations

Health plan deductions are typically determined by the number of pay periods. As a result, a leap year may force employers to recalculate health plan deductions. Additionally, a leap year can impact employee contributions to 401(k)s, health savings accounts and flexible savings accounts, requiring employees to adjust how much is deducted from each paycheck to ensure they contribute the maximum amount by the end of the year. Therefore, it’s important employers communicate how a leap year may impact employee contributions and allow employees sufficient time to adjust.


The IRS recently finalized reporting regulations under the Affordable Care Act that established a permanent 30-day automatic extension from Jan. 31 for employers to furnish Form 1095-C to employees. According to IRS guidance, applicable large employers must furnish Forms 1095-C to their employees no later than March 2. However, because of the 2024 leap year, the deadline this year is March 1, 2024.


Moreover, the Medicare Modernization Act requires organizations whose health care policies include Medicare prescription drug coverage to notify Medicare-eligible policyholders whether their prescription drug coverage is creditable. These entities must report the credible coverage status of their prescription drug plan to the Centers for Medicare (CMS) no later than 60 days from the beginning of a plan year. If a plan year starts at the beginning of the year, employers typically have until March 1 to report to the CMS. In 2024, however, the reporting must be done by Feb. 29.


Employer Compliance Considerations

The 2024 leap year may also impact certain employer compliance requirements. Employers should review their compliance obligations to ensure they avoid any potential violations.


While many laws are silent on the impact of a leap year, employer obligations are not altered. For example, the Fair Labor Standards Act (FLSA), which establishes minimum wage, overtime pay, recordkeeping and youth employment standards, does not specifically address leap-year considerations. However, since a leap year can create 27 or 53 pay periods (rather than 26 and 52), an employee’s weekly salary may drop below the federal or state-exempt salary threshold in certain circumstances. If this occurs, that employee would lose their FLSA exempt status, which could result in wage and hour violations if not properly addressed. Calculating any pay period adjustments at the start of the year can help employers prepare and avoid potential FLSA overtime and meal and rest break violations that may occur if employees lose their FLSA exempt status due to the additional pay period.


Additionally, employers can review offer letters and other compensation-related documents, including collective bargaining agreements, to determine how best to account for any extra pay periods. In some instances, these documents may state how frequently employees must be paid (e.g., weekly, biweekly). Reviewing these documents can help organizations comply with their legal obligations when determining how to adjust employee compensation during a leap year.


Summary

The additional day in 2024 may present various administrative and compliance challenges for some organizations. Understanding how a leap year impacts compliance requirements can enable employers to prepare and help them avoid costly mistakes. By taking a proactive approach and reassessing timelines, employers can help ensure they meet any compliance requirements and mitigate any potential legal risks.



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New System, Same Problems? Why a Payroll Transition Should Start With an Assessment

October 14, 2026
Changing payroll or HCM providers can be a major decision for any employer, especially for small and mid-sized businesses where payroll touches nearly every employee, every pay period, and many of the systems that keep the business running. That is why a successful transition should involve more than simply moving data from one platform into another. A new system can offer better technology, stronger reporting, improved employee self-service, and more efficient workflows. But those benefits are not automatic. If an employer simply recreates the same workarounds, outdated data, and disconnected processes in a new platform, the result may look different without actually working much better. A payroll transition should be an opportunity to step back, evaluate how the business operates today, and intentionally build a better environment for the future. Start With How the Business Actually Works Before configuring a new payroll or HCM system, it is important to understand what is happening in the current environment. That means looking beyond payroll processing and examining how information moves through the organization from onboarding and timekeeping to benefits, HR administration, reporting, and eventually separation. For many growing businesses, processes develop gradually. Spreadsheets, manual approvals, and duplicate data entry may have been created to solve individual problems over time. Together, those workarounds can create unnecessary administrative work and increase the risk of errors. Before moving into a new system, employers should identify where information is being entered more than once, what still depends on manual follow-up, where managers or employees routinely get stuck, and which reports are difficult to produce. That creates a much stronger foundation than simply asking how to make the new system look like the old one. Separate What Works From What Has Simply Become Familiar One of the easiest mistakes to make during implementation is assuming that every existing process should be preserved. Familiarity does not always mean efficiency. A payroll workflow, approval structure, or reporting process may exist simply because that is how the previous system was configured. A useful question to ask is: If we were designing this process today, would we still do it this way? Some processes will absolutely make sense to keep. Others may be creating unnecessary effort because of old system limitations. The goal should not be to change everything. It should be to preserve what works while improving the areas that create friction, confusion, or risk. Clean Up the Data Before It Becomes New-System Data Payroll and HCM systems contain a significant amount of information, including employee data, tax setup, earnings and deductions, departments, locations, job information, permissions, benefits, and timekeeping rules. Over time, some of that information may become outdated, duplicated, or structured in a way that no longer reflects the business. Moving that information into a new system without reviewing it first can preserve those same issues. A thoughtful implementation should include time to validate employee records, review earning and deduction codes, confirm tax setup, evaluate organizational structures, and identify information that should be cleaned up before migration. The objective is not simply to move data successfully. It is to start the new environment with information that is as accurate, organized, and useful as possible. Payroll Should Not Be Evaluated in Isolation Payroll may be the system that processes the paycheck, but the information it relies on comes from many different parts of the business. Hiring, timekeeping, HR, benefits, retirement contributions, employee status changes, and other workforce processes all intersect with payroll. When those areas are managed independently by different vendors or disconnected systems, employers are often left responsible for making everything work together. That can create duplicate entry, manual reconciliation, inconsistent data, and more opportunities for something to fall through the cracks. A better implementation looks at the entire administrative environment, not just the payroll engine. Why the ASO Model Matters This is where an Administrative Services Organization, or ASO, model can create meaningful value for small and mid-sized employers. Traditionally, businesses often purchase payroll, HR, benefits, retirement, and commercial insurance from separate providers. Each provider may do its individual job well, but the employer is still left managing the gaps between them. Those gaps matter because these functions are highly interdependent. A new hire can affect payroll, benefits eligibility, workers’ compensation exposure, retirement participation, and HR compliance. A termination can trigger payroll changes, benefits administration, HR documentation, and additional follow-up. An ASO approach is designed to bring those functions into a more coordinated model. Instead of asking the employer to act as the connector between multiple vendors, the goal is to create greater alignment across the services that support the workforce. At Simco, that means looking at HCM technology, HR advisory, employee benefits, commercial insurance, and retirement advisory as part of one broader business environment. The value is not simply access to more services. It is creating a more connected administrative structure with fewer handoffs, clearer ownership, and better visibility. Build Around the Employee Lifecycle, Not Just the Payroll Run A well-designed HCM environment should support more than the moment payroll is processed. It should help manage the full employee lifecycle, from onboarding and timekeeping through compensation, benefits, HR administration, retirement, and offboarding. Looking at implementation through that lens often reveals opportunities that would otherwise be missed. Onboarding may still be manual. Managers may submit changes through email. Benefit information may need to be entered in multiple places. Employee data may not flow consistently between systems. These may not seem like payroll problems, but they directly affect how efficiently payroll and HR administration operate. That is why implementation conversations should include more than pay frequency and tax setup. They should also examine how employees enter the organization, how managers interact with the system, how changes are communicated, and where administrative work tends to pile up. Leave Enough Time to Build It Correctly A thoughtful assessment takes time, which is why employers should avoid waiting until the last minute to begin a payroll or HCM transition. There is a significant difference between getting a system live and building a system well. A well-planned implementation creates room to evaluate processes, validate data, configure the system, test workflows, train users, and correct issues before employees depend on it. For employers considering a January transition, beginning the conversation in the fall can provide valuable runway and allow for more deliberate decisions before year-end pressures increase. Why Simco Starts With the Blueprint At Simco, we believe implementation should begin with understanding the business, not simply collecting files. Our Simco Blueprint assessment is designed to look at how an employer is operating today before the new environment is built. We review current processes, identify what is working, uncover areas of friction, and look for opportunities to improve how the organization uses its payroll and HCM technology. That assessment also considers how payroll interacts with HR, benefits, commercial insurance, and retirement. The objective is to make sure the system supports the business as a whole rather than solving one problem while creating another. A successful transition should leave an employer with more than a new provider. It should create a stronger foundation for how the business manages its people and administrative responsibilities. A New System Should Be an Opportunity to Work Better Changing payroll or HCM providers is a significant project, but it can also be an opportunity to improve processes that may have been creating frustration for years. The key is resisting the temptation to simply recreate the old environment. Before moving data, employers should understand their current processes. Before configuring workflows, they should decide whether those workflows still make sense. Before going live, they should make sure the different pieces of their administrative environment are working together effectively. A new system should not just be a different place to do the same work. It should help make the work easier. If your organization is considering a payroll or HCM change, Simco can help you evaluate your current environment, identify opportunities for improvement, and understand what a thoughtful transition could look like. Ready to take a closer look at your current setup? Talk with the Simco team .

Thinking About a January Payroll Switch? 4 Things Employers Should Know Now

October 8, 2026
January is one of the most natural times for an employer to move to a new payroll or HCM provider. A new calendar year creates a clean transition point for payroll records, reporting, employee communication and internal processes. But a January go-live does not mean the work should begin in January. For employers considering a change, the most important part of the transition often happens months earlier. A successful implementation requires time to understand the current environment, make decisions about what should change, validate employee and payroll data, configure the new system, test it and prepare everyone who will use it. If a January payroll change is on your radar, here are four things worth knowing now. 1. A January switch should usually start well before January One of the biggest misconceptions about changing payroll providers is that the transition begins when the new system goes live. In reality, that is the end of the implementation process. Before the first payroll can run, there are a number of decisions and setup items that may need attention, including employee records, earnings and deductions, tax information, pay schedules, timekeeping rules, direct deposit information, security permissions, reporting requirements, integrations and other company-specific workflows. The complexity will vary from employer to employer, which is why there is no single implementation timeline that fits every organization. But if your goal is to be live at the beginning of the year, October and early November are a much better time to begin the conversation than December. Starting earlier gives both the employer and the new provider room to work carefully instead of trying to force a major system change through the busiest part of year-end. 2. Do not automatically recreate everything you have today Changing payroll providers is an opportunity to fix problems, not transfer them. It can be tempting to approach implementation by simply copying the setup in the current system into the new one. That may seem like the fastest path, but it can also carry old inefficiencies, outdated processes and bad data directly into the new platform. Before building anything, employers should take a closer look at questions such as: Which payroll processes create the most manual work? Are employees or managers struggling with any part of the system? Are there recurring corrections or data issues? Are you maintaining information in spreadsheets because the current system does not handle it well? Are timekeeping, HR, benefits and payroll working together effectively? Are there reports your team needs but struggles to produce? Have your workforce, policies or business processes changed since the system was originally implemented? A provider change should create a better operating environment, not simply give the same process a new login screen. This assessment stage is one of the reasons beginning early matters. 3. Data accuracy becomes especially important at year-end A payroll transition involves more than moving names and pay rates. Employee information, year-to-date wages, taxes, deductions and other payroll records may all play a role in making sure the old year closes correctly and the new year begins accurately. Year-end also brings important employer reporting responsibilities. Employers remain responsible for ensuring payroll tax filings and Forms W-2 are accurate and filed on time even when they use a third-party payroll provider ( IRS ). That makes data review an important part of any year-end implementation. Employers should expect to spend time verifying items such as: Employee names, addresses and Social Security numbers Federal, state and local tax setup Year-to-date payroll totals Earnings and deduction codes Benefit deductions Retirement contributions Garnishments and other recurring deductions Direct deposit information Company tax information and filing setup There may also be special year-end items such as bonuses, fringe benefits or other adjustments that need to be reflected correctly. The goal is not simply to import data. It is to make sure the information going into the new system is accurate and that responsibility for year-end versus new-year reporting is clearly understood. 4. The right implementation should include testing, training and a clear owner Technology is only one part of a payroll conversion. Someone also needs to coordinate the process. A good implementation should establish clear responsibilities, deadlines and points of contact so the employer is not left trying to manage multiple moving pieces on their own. Before going live, employers should understand: Who is overseeing the implementation? There should be someone responsible for keeping the project moving and helping coordinate questions, decisions and outstanding items. How will the system be tested? Payroll calculations, deductions, taxes, time data and other important configurations should be reviewed before the first live payroll. How will managers and employees be prepared? If employees will use a new portal, mobile app, timekeeping process or enrollment experience, communication and training should be part of the transition. What support will be available after go-live? Implementation should not end the moment the first payroll processes. Employers should know who they will contact when questions arise afterward. A well-managed transition gives an employer time to catch issues before they become payroll-day emergencies. January can be a good time to change if you give yourself enough runway For employers who are frustrated with their current provider, January can provide a natural opportunity for a fresh start. However, this decision should not be rushed simply to hit a January 1 date. The better question is: Do we have enough time to evaluate our current process, build the new environment correctly and make the transition confidently? If the answer is yes, starting the conversation now can make the next few months much more manageable. At Simco, we work with employers to look beyond the payroll system itself. We assess how payroll, HR, timekeeping, benefits and the surrounding processes fit together so the new environment is built around how the business actually operates. If you are considering a payroll or HCM change for 2027, now is the time to start mapping out what the transition would involve. A short conversation can help determine what needs to happen, what information you will need and whether a January transition makes sense for your organization. Want to talk through your January timeline? Click here .

How Financial Wellness Supports the Employee Experience

September 21, 2026
For a long time, conversations about employee financial wellbeing started and ended with compensation. Pay people accurately, pay them on time, offer a competitive benefits package, and the employer had largely done its part. Those things are still fundamental. But the way employees experience their finances is much broader than a paycheck arriving every other Friday. A car repair does not wait until payday. A medical bill can arrive unexpectedly. Someone trying to improve their credit may not know where to begin. Another employee may be juggling everyday expenses while trying to save for a home, pay down debt or simply build a little more breathing room into their monthly budget. Employers are not expected to solve those challenges. But increasingly, they are recognizing that they can make useful resources easier to access. That shift is helping financial wellness become a more meaningful part of the overall employee experience. Financial Wellness Is Really About Giving Employees More Options There is no single definition of financial wellness that applies to everyone. For one employee, it may mean learning how to build a budget that actually works for their household. For another, it may mean having access to earned wages when an unexpected expense comes up before payday. Someone else may be focused on improving their credit, understanding financial terminology or finding an easier way to complete an employment or income verification. That is part of what makes this area different from many traditional benefits. Employees are not all trying to solve the same problem at the same time. A strong financial wellness approach does not assume that they are. Instead, it gives employees access to a range of resources and allows them to decide what is useful for their own circumstances. The employer is not stepping into the role of financial adviser. The employer is simply making it easier for employees to find tools, education and support when they need them. That can be a powerful distinction. The Employee Experience Extends Beyond What Happens at Work When organizations think about employee experience, the conversation often centers on things like company culture, managers, career development, recognition and benefits. Those things matter enormously. But employees also bring the realities of everyday life with them when they come to work. Financial concerns are one of those realities. An employee who is worried about an unexpected expense, trying to make sense of debt or unsure where to find reliable financial information may still show up and do their job well. But that does not mean those concerns disappear during the workday. This is where employers have an opportunity to think more broadly about support. The goal is not to remove every source of financial stress. That would be unrealistic. The opportunity is to make certain situations a little easier to navigate by connecting employees with resources they may not otherwise know about or have convenient access to. Sometimes that means education. Sometimes it means greater flexibility. Sometimes it simply means removing friction from an everyday process. Taken together, those small improvements can contribute to an employee experience that feels more thoughtful and supportive. Useful Benefits Are Often the Ones Employees Can Actually Use Employers spend significant time and money building benefits packages, but a benefit only creates value when employees understand it and can realistically access it. That is one reason financial wellness resources are particularly interesting. Many of them are designed around practical, everyday needs rather than something an employee may only use once or twice a year. They can help people answer questions, learn something new, access information or manage an immediate financial need. This creates an opportunity for employers to think beyond simply adding more benefits. Sometimes the better question is: How can we make the resources already available to employees more useful, accessible and relevant to their daily lives? That mindset can be especially valuable for organizations that want to improve the employee experience without adding another complicated program for HR to administer. The Payroll and HCM Experience Is Changing Too Payroll technology has traditionally been viewed as operational infrastructure. It calculates pay, handles taxes, stores employee information and keeps the organization moving. All of that remains essential. But modern HCM platforms increasingly sit at the center of much more of the employee experience. Employees may log into the same system to view a paystub, update personal information, enroll in benefits, request time off or access other workplace resources. Because they are already interacting with that technology, it creates a natural place to connect them with additional tools. That matters. A resource hidden on an intranet page that no one remembers exists has limited value. A resource that is connected to technology employees already use has a much better chance of becoming part of their normal experience. For HR teams, there is another benefit: introducing additional employee resources does not necessarily have to mean introducing another disconnected system, another login or another administrative burden. When tools work within the broader HCM ecosystem, employers can expand what they offer while keeping the experience simpler for everyone involved. Financial Wellness Can Support the Employer, Too The most important reason to offer financial wellness resources is the value they can provide to employees. But there is an employer benefit as well. Organizations are continually looking for meaningful ways to strengthen their employee value proposition. Compensation will always be a major part of that equation, but employees also notice how easy or difficult it is to navigate everyday life at work. Can they find the information they need? Are useful resources clearly communicated? Does the technology make things easier? Does their employer seem to think about the employee experience beyond the minimum requirements? Those details shape how people experience an organization. Financial wellness resources can become one more way for employers to demonstrate that support in a practical way. They can complement existing benefits, help employees get more value from the technology already in place and give HR teams another resource to point employees toward when appropriate. The value is not necessarily in one dramatic program. Often, it is the accumulation of small conveniences and helpful resources that makes an employee experience feel noticeably better. A New Set of Resources for Simco Clients This thinking is part of why we were excited to recently expand the resources available to Simco clients through our partnership with isolved. Through isolved People Cloud™, eligible employees now have access to additional tools from FinFit, ZayZoon and Equifax , each designed to support a different part of the financial wellness and employee experience. FinFit provides financial education and wellness resources that can help employees build knowledge and confidence around everyday financial decisions. ZayZoon offers employees additional financial flexibility, including access to earned wages before the traditional payday when needed. Equifax provides employment and income verification services that can help simplify a process employees may encounter when applying for a loan, renting a home or completing other important financial transactions. Each resource serves a different purpose, and not every employee will need every tool. That is exactly the point. The goal is to create more options and make them easier to access. Making Resources Available Is Only the First Step One of the easiest mistakes employers can make is assuming that introducing a new benefit automatically means employees will use it. Usually, awareness has to come first. Employees need to know what a resource is, why it exists and when they might consider using it. That communication does not have to be complicated. A short reminder in an employee newsletter, a mention during onboarding, a benefits communication or an occasional educational email can go a long way toward keeping useful resources visible. It can also help to communicate these tools in terms employees actually relate to. Instead of simply saying, “We offer a financial wellness program,” explain what that could mean in real life: Need help understanding your budget? There is a resource for that. Want to learn more about credit? There is a resource for that. Need access to part of your earned pay before payday? There may be an option available. Completing an income verification? That process may already be easier than you think. When employees understand the practical purpose behind a resource, it becomes much more meaningful. A Better Employee Experience Is Often Built in Small Ways Supporting employees does not always require launching a major new initiative. Sometimes it means looking at the systems, benefits and resources already surrounding employees and asking whether they could be doing more. Could something be easier to access? Could employees have more flexibility? Could a process require fewer steps? Could a resource help someone feel more informed or confident? Those may seem like small questions, but they are increasingly important ones. Financial wellness is ultimately about giving employees more tools to navigate their own financial lives. Employers do not need to have every answer, and they do not need to solve every challenge. But they can help create an environment where useful resources are easier to find, easier to understand and available when they matter. For Simco, that is what makes these new resources exciting. They are not simply additional features inside a platform. They are another way the technology our clients already use can create a better experience for the people behind every payroll.  Want to learn more about the financial wellness resources now available through Simco and isolved? Contact our team to learn more.

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