How Payroll Cut-off Dates Work With Weekends and Holidays

Payroll runs on a strict banking calendar. ACH payments do not settle on weekends or on the holidays the Federal Reserve Banks observe, and on a banking day they settle only at the times the ACH Operator's schedule sets. Here is how the moving parts fit together.

The ACH banking day

Nacha writes the rules for the ACH network, but it does not process the payments. There are two ACH Operators: the Federal Reserve, through its FedACH service, and The Clearing House. Nacha's own summary is that payments settle when the Federal Reserve's settlement service is open, and that service is closed on federal holidays and weekends.

The Federal Reserve Banks publish their holiday schedule, and it lists 11 holidays. Two rules move the observed day. When a holiday falls on a Sunday, the Banks close the following Monday. When a holiday falls on a Saturday, the Federal Reserve Banks stay open on the preceding Friday, even though most federal employees have that Friday as their holiday, so ACH settles on that Friday as on any other banking day.

When you originate an ACH credit (a payroll deposit, for example), the file goes through the originating depository financial institution (ODFI), the ACH Operator, and then the receiving depository financial institution (RDFI). The settlement date is the banking day on which funds move between the ODFI and RDFI. On the FedACH processing schedule (effective 12 September 2022), files dated for a future banking day settle at 8:30 AM ET on that day, and the last transmission deadline listed for them is 2:15 AM ET. Your bank sets its own deadline for accepting your file, and that is the time your payroll calendar has to meet.

Same Day ACH lets credits settle on the banking day they are sent. Nacha introduced it in three phases, effective 23 September 2016, 15 September 2017 and 16 March 2018, and a later rule added a third same-day window from 19 March 2021. FedACH's same-day transmission deadlines are 10:30 AM, 2:45 PM and 4:45 PM ET, settling at 1:00 PM, 5:00 PM and 6:00 PM ET respectively. In the Federal Reserve's sample scenarios a same-day entry must be $1,000,000 or less, and a larger entry settles at 8:30 AM ET on the next business day.

The pay-early-or-late question

When payday falls on a Federal Reserve holiday or a weekend, you have two choices: pay early or pay late. Nacha describes paying early as the standard industry practice: paydays that would otherwise fall on a weekend or holiday are paid on the prior Friday.

Pay early means originating the ACH file a banking day sooner so funds settle on the banking day before the holiday. If your normal Friday payday lands on a Fed holiday, as it does when Juneteenth falls on Friday 19 June 2026, the file should settle Thursday and funds should be in employee accounts Thursday.

Pay late means originating the file as usual and accepting that funds will not arrive until the next banking day after the holiday. Employees see their direct deposits a day late, which matters to anyone who has timed rent, a mortgage payment or a bill around the usual date.

State wage law can take the choice away. California Labor Code Section 204(a) requires labor performed between the 1st and the 15th of a month to be paid for between the 16th and the 26th of that month. California's Labor Commissioner says that when a regular payday falls on a holiday and the employer closes for it, the employer may pay on the next business day; the answer does not list the days it counts as holidays. Section 204(d) adds that a weekly, biweekly or semimonthly payroll satisfies the section when wages are paid not more than seven calendar days after the close of the payroll period. Paying early stays inside each of those limits.

The biweekly cutoff calendar

Biweekly payroll runs every 14 days. Take a schedule where the pay period ends on a Sunday, hours and adjustments are due Monday, processing runs Tuesday and Wednesday, the ACH file goes to the bank Wednesday or Thursday, and payday is Friday.

When a Federal Reserve holiday lands in that processing window, every step shifts. A holiday on Wednesday compresses the processing into Tuesday and Thursday. A holiday on Friday (the payday) requires either Thursday payment (pay early) or Monday payment (pay late). Writing the adjusted dates into a payroll calendar at the start of the year, holiday by holiday, removes the guesswork from each affected run.

Semimonthly versus biweekly: the math is different

Semimonthly payroll runs twice a month, for example on the 15th and the last day. Annual paychecks: 24. Biweekly runs every 14 days. Annual paychecks: 26 in most years, 27 in some.

For salaried employees, the per-paycheck calculation differs:

• Semimonthly: annual salary divided by 24.
• Biweekly: annual salary divided by 26 (or 27 in a 27-paycheck year).

The 27-paycheck year is the operational headache of biweekly pay. Twenty-six biweekly paydays cover 364 days, so the payday drifts one day earlier in the calendar each year (two after a leap day) until a year holds 27 of them. For any fixed biweekly schedule, those 27-payday years come 11 or 12 years apart. There are two ways to handle one: (a) reduce per-paycheck pay slightly across all 27 checks so total compensation stays the same, or (b) keep per-paycheck pay constant and treat the 27th check as extra pay.

If your payroll software calculates per-paycheck pay from a stored annual salary, it has to know which of those two choices you made. If it uses a stored per-paycheck rate, the 27th paycheck carries the same dollar amount as every other check, which means total annual pay comes out higher than the stated salary. Either way, tell employees in advance what the 27th paycheck will do.

Holiday clusters that compress payroll

Two periods each year deserve special attention.

Late December through New Year: Christmas Day and New Year's Day are both Federal Reserve holidays, exactly one week apart, so a biweekly or semimonthly payday in that stretch often sits next to one of them. The Saturday rule matters here. Christmas Day 2027 and New Year's Day 2028 both fall on a Saturday, and the Federal Reserve Banks are open on Friday 24 December and Friday 31 December 2027.

Late November (Thanksgiving): Thanksgiving Thursday is a Federal Reserve holiday and the Friday after it is not, so ACH settles on that Friday as on any banking day. A file sent on Wednesday for Friday settlement therefore settles on the next banking day; if your bank or payroll provider asks for more lead time that week, send it Tuesday.

For exact same-week math, use the Add Business Days calculator with the US holiday set selected. That set follows the federal employees' calendar, so it counts the Friday before a Saturday holiday as a holiday, although the Federal Reserve Banks are open that day. To see how many working days a given month contains, use Business Days in a Month.

State-specific timing rules

Federal law ties payment to the employer's own payday: the Department of Labor's guidance under the Fair Labor Standards Act is that wages are due on the regular payday for the pay period covered. Several states go further:

• California Labor Code 204(a): Labor performed between the 1st and the 15th is paid for between the 16th and the 26th of the same month; labor performed between the 16th and the last day of the month, between the 1st and the 10th of the following month.
• New York Labor Law 191: Manual workers must be paid weekly, no later than seven calendar days after the end of the week in which the wages are earned; a non-profit employer, or one the Commissioner of Labor has authorised, may pay them semi-monthly instead. Clerical and other workers must be paid at least semimonthly, on regular paydays designated in advance.
• Texas Labor Code Section 61.011: Employees exempt from FLSA overtime must be paid at least once a month; other employees at least twice a month, with each pay period as nearly as possible equal in length.

When a Fed holiday lands inside the statutory window, paying early keeps the deposit date inside the statutory limit.

Wire transfers as a backup

When ACH timing does not work (a critical correction, a one-off termination payout, an emergency executive bonus), wire transfers are the backup. The Federal Reserve's Fedwire Funds Service processes customer transfers until 6:45 PM ET; the 5:00 PM ET cutoff on the same schedule is for tax payments and special accounts. Your own bank's cutoff can come earlier: Wells Fargo, for example, publishes 3:00 PM PT (6:00 PM ET) as the cutoff for a domestic digital wire to be processed the same day. Fedwire follows the same holiday schedule as ACH, including staying open on the Friday before a Saturday holiday. For more on wire cutoffs, see the wire transfer cut-off times guide. If the person you are paying is a contractor in another country rather than an employee, the guide to hiring international contractors shows how a payment date moves when both countries' holidays count.

FAQ

Should I run payroll early or late when payday falls on a Federal Reserve holiday?

Run early. ACH payments settle only when the Federal Reserve's settlement service is open, and it is closed on federal holidays and weekends. Nacha describes paying on the prior Friday as the standard industry practice. If your normal payday is a Fed holiday (such as Juneteenth on a Friday), settle the ACH file on the preceding banking day so funds are in employee accounts on time. Running late delays the deposit by at least one banking day.

What are the ACH deadlines for next-day and same-day settlement?

On the FedACH schedule, same-day files have transmission deadlines of 10:30 AM, 2:45 PM and 4:45 PM ET, settling at 1:00 PM, 5:00 PM and 6:00 PM ET. Files dated for a future banking day settle at 8:30 AM ET on that day, with a latest transmission deadline of 2:15 AM ET. Those are the operator's deadlines; your bank sets its own, and that is the one your payroll file has to meet.

Why do some years have 27 biweekly paychecks instead of 26?

Biweekly pay creates 26 paychecks per 364-day cycle, but the calendar has 365 or 366 days. The payday therefore drifts a day earlier each year, two after a leap day, and for any fixed biweekly schedule a year with 27 paydays comes around every 11 or 12 years. This affects salaried employees whose annual salary is divided by 26; the 27-paycheck year needs either a smaller amount per check or an extra check on top of the stated salary.

Does FLSA require payment on a specific day of the week?

No. The Fair Labor Standards Act ties payment to the employer's own payday: the Department of Labor's guidance is that wages required by the FLSA are due on the regular payday for the pay period covered. State laws are stricter: California Labor Code Section 204 requires payment at least twice a month by fixed dates, and New York Labor Law Section 191 requires manual workers to be paid weekly (non-profits and employers the Commissioner of Labor authorises may pay semi-monthly), no later than seven calendar days after the end of the week in which the wages are earned.

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