When there are three biweekly pay dates in a month, the flat dollar amount deductions are not taken from the paycheck on the third pay day.
The paydays when flat dollar amount benefits are not deducted are referred to as benefits "holidays." This typically occurs twice each year.
Two types of deductions are taken from paychecks:
- Flat dollar amount deductions are set dollar amounts that do not vary from paycheck to paycheck (e.g. $25). Examples include: health and welfare benefits, transit and parking deductions, credit union deductions, loan payments, etc.
- Percent deductions are proportionate to your earnings (e.g. 2% of your gross pay. Gross pay may vary if you work overtime or work a variable schedule.) Examples include: state and federal taxes, UC Retirement Plan, Medicare, OASDI, etc.
For biweekly paid employees, payroll deductions are split across the biweekly paychecks.
- Flat dollar amount deductions are divided and deducted twice each month.
- Percentage based deductions are deducted from every check.
Payroll deductions are taken in this way to provide biweekly paid employees with a more predictable "take home" or "net" pay.
When there are three biweekly pay days in a month, the flat dollar amount deductions are not taken from the paycheck that occurs on the third pay day. The paydays when flat dollar amount benefits are not deducted are referred to as benefits "holidays." This typically occurs twice each year.
It may be helpful to take a look at the payroll calendar. Note that two months have three pay dates.
An Exception for Garnishments
All garnishments, whether flat dollar amounts or percentages, are deducted from every paycheck. This is the only exception to the way that flat dollar and percentage deductions are made. Flat dollar garnishments are calculated as follows: Monthly amount times 12 divided by 26. Example: $500 per month equals $6,000 per year, divided by 26 equals $230.77 biweekly deductions.
Type of Deduction
Percentage Based Deductions
Withheld from every paycheck (26 times per year)
Flat Dollar Amount Deductions
Withheld from first two biweekly paychecks of the month (24 times per year) -- except garnishments
403B or 457B, if employee has elected flat dollar amount deduction (such as $100 per month)
UC Retirement Plan (UCRP)
Union Dues/Fair Share
- Flat dollar amount deductions are split evenly between the two paychecks that represent the first and second biweekly pay periods of that month.
- When there are three biweekly pay dates in a calendar month (which typically occurs twice each year), no flat dollar amount deductions will be taken from the pay check for the third biweekly pay day. This is called a "benefits holiday."
- Percentage-based deductions are always taken from every check.
- Flat dollar amount garnishments are always taken from every check.