December is one of the busiest payroll months of the year because banks close for several federal holidays, ACH processing slows down, and many businesses operate with smaller teams.
Paydays that fall on holidays like New Year’s Day or Thanksgiving, or the weekend surrounding them, hit a wall because banks do not process anything until they open again. Employees notice that delay immediately, and some states take paycheck timing seriously enough that it can become a compliance concern.
Once you know how these closures affect timing, it’s much easier to plan around them and avoid unnecessary drama.
How Bank Holidays Affect Direct Deposit
Direct deposits do not post on federal bank holidays. The Automated Clearing House (ACH) network, which moves funds between banks, settles payments only on standard business days.
When the Federal Reserve is closed, ACH is closed. This means during holiday closures, nothing runs behind the scenes. Payments that would normally hit the following morning wait in line until banks reopen. That’s why Federal holidays sometimes create delays.
What Happens When Payday Falls on a Weekend?
Weekend paydays work the same way as holidays, since the ACH system doesn’t process any payments on Saturdays or Sundays. If you normally pay your employees on a Sunday, those funds will not be settled and received until Monday.
If payday falls on a Saturday, most employers shift payment to Friday. Moving the deposit earlier avoids delays and prevents employees from waiting for their wages that they expect on time.
Your Options When Payday Lands on a Holiday
When a regularly scheduled payday conflicts with a holiday closure, you have several choices:
- Running payroll early so your employees receive their deposit before the holiday
- Processing payroll on the normal day and allowing deposits to clear once banks reopen
- Expediting processing payroll - if your payroll provider offers this service
Getting payroll in early tends to make everything smoother for both the company and employees, especially when you have a big workforce or operate in different states
Why Consistency Matters for Compliance
The Fair Labor Standards Act requires employers to pay wages consistently and follow a predictable pay cycle. Some states have added in their own rules and are more strict than the FLSA.
Because of these requirements, running payroll early is usually safer than waiting until after the holiday closure.
New York Payroll Timing
New York has some of the strictest payday rules in the country. Manual workers must be paid weekly and most other employees must be paid at least semi-monthly. The state also limits how long wages can remain unpaid after the end of a pay period, which means holiday delays can easily push an employer outside the required timing window.
Because banks are closed on Federal holidays, New York employers generally avoid risk by submitting December payroll early so deposits clear before the holiday closures.
New Jersey Payroll Timing
New Jersey requires every employer to establish a regular payday and follow it consistently. Employees must be paid at least twice per month unless they fall under an exemption. Although New Jersey doesn’t lay out holiday-specific payroll rules, a bank closure can still disrupt your regular payday. Running December payroll a day early is an easy way to keep employees paid on time and avoid falling outside your usual cycle.
The Smartest Way to Plan December Payroll
Planning ahead can help you take the stress out of holiday payroll. Start by look over your December and early January pay schedule and note any dates affected by holidays or weekends. From there, you can choose whether payments should go out early or the next business day.
Your end of year plan can include:
- Reviewing pay dates for Christmas week
- Reviewing the first January payroll date
- Confirming hours and adjustments earlier than usual
- Letting employees know if any timing will shift
Planning ahead can make the entire season easier for both your team and your business.
Holiday Payroll FAQs
What time does direct deposit post after a holiday?
Once banks reopen, deposits usually post the next business day. The exact time depends on the bank’s internal posting schedule, but most release funds early in the day.
Does direct deposit go through on a holiday?
No. ACH does not process on federal holidays. Payroll submitted during a closure will settle once the next business day begins.
Do employee payments get delayed if payroll is not run early?
Yes. Processing payroll too close to a holiday often means the deposit won’t clear until the next business day. Employees feel that delay immediately, and it can be especially tough during a season when expenses are higher.
Can payroll be processed on weekends?
No. ACH does not process on Saturdays or Sundays. Any payroll initiated over the weekend will post Monday, unless the Monday is also a bank holiday.
Wrapping It All Up 🎁
Holiday closures do not have to complicate payroll! With a little planning, a consistent schedule, and support from a provider that already accounts for federal bank holidays, you can keep paydays on track and finish the year without unnecessary stress. If you want help reviewing your December dates or setting up your 2025 payroll calendar, MegaPay is here to support you.
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