Payroll timing change takes effect next week for salary nonexempt staff

Beginning Oct. 1, Iowa State's merit, contract and professional and scientific (P&S) employees and postdoctoral scholars in salary nonexempt positions will change to hourly nonexempt positions and be paid twice a month. University human resources (UHR) first shared this change in late May.

Impacted employees' compensation is not changing. Their current annual salaries will show up as an hourly rate in Workday, but their base pay is not impacted.

The change creates a consistent payment schedule for all nonexempt employees at Iowa State. Salaried nonexempt employees, once converted to hourly nonexempt, will continue to track their hours worked and time off in Workday, and a weekly submission for manager's approval remains the minimum expectation.

The federal Department of Labor sets guidelines for nonexempt positions, and staff in ISU's general counsel and university human resources offices apply them to university positions. As of this month, the change impacts an estimated 470 merit and 480 P&S employees. It also impacts a handful each of contract employees and postdoctoral scholars.

Transition payment in October

The transition from a monthly to semimonthly pay cycle creates a two-week lag in pay, so to assure their 2024 salaries aren't diminished, impacted employees will receive a one-time transition payment at the end of October. For them, the month will look like this:

• They will receive a paycheck on Oct. 25 for hours worked Oct. 1-15.
• They will receive a one-time transition payment on Oct. 31, equivalent to 88 hours of pay for full-time employees and prorated for part-time employees. This payment, intended to bridge the gap in their earnings during the transition period, will be distributed the same as a payroll check.
• They will receive a paycheck on Nov. 8 for hours worked Oct. 16-31.

Once semimonthly pay is fully implemented in November, nonexempt employees will be paid twice a month for actual hours worked during two pay periods: Days 1-15 of the month and days 16-last day of month. Illustration of transition. UHR shared a breakout of payroll deductions -- for example, insurance premiums, charitable deductions or parking permit payments -- between the two paychecks.

"We encourage impacted employees and their supervisors to familiarize themselves with the materials. Employees need to take action to make sure they have their personal finances set up for two paychecks each month instead of one," said Kristi Darr, vice president for university human resources.

Emails to those impacted

Impacted employees, their supervisors and administrative officers received reminder emails about this change Sept. 10 from university human resources leaders. Via a Sept. 13 Workday to-do task, impacted employees were asked to acknowledge they understand their payroll will change to semimonthly.

Benefits to the increased pay frequency include:

• Removing the guesswork from the last few days of the month. Employees are paid for actual time they've worked, rather than for days yet to be worked. This change will reduce the over/under payments for employees who make changes during the final few days of the pay cycle.
• More effective budgeting for units.
• ISU's payroll team spends less time processing off-cycle overtime checks.

Questions about the change may be emailed to semimonthly@iastate.edu.