Are You Working For Free On Leap Year Day?

A look at February 29 and Money

Are You Working For Free On Leap Year Day?
February 25, 2016

What strange event happens every four years? No, it's not the Presidential race — although “strange” certainly sums up the 2016 race nicely. We are thinking more about Leap Year.

February 29 falls on a Monday this year, making it just another workday for most people. Do you get paid for that extra workday? That depends on your status and the pay policies at your workplace. If you are an hourly employee on the clock, it represents an extra workday and an extra salary for that workday, so your income for the year increases by one day's pay. If you are a salaried employee, things get a bit more interesting.

Typically, salaried employees are paid on an annualized salary basis. Your pay is spread out based on the number of increments in that year. For example, if you are paid biweekly, your salary is 14/366ths of your salary in 2016 instead of 14/365ths. You can look at it as working for free that day if you want, but it is not uncommon for salaried employees to work longer hours than the forty-day workweek — so it is really just a matter of semantics.

The uneven division of both 365 and 366 into weekly increments, however, leads to other payroll-related leaps. For example, if you are paid weekly on a Monday, you receive an extra paycheck in years with 53 Mondays instead of the usual 52.

For workers who were paid biweekly (a typical arrangement), 2015 was a "payroll leap year" since it had 27 pay periods instead of the usual 26. Whether this resulted in actual extra pay for you depended on whether your company chose to divide your salary over 26 or 27 pay periods. (From a payroll perspective, both 2015 and 2016 can be considered back-to-back leap years.)

If an extra day's worth of wages and benefits were actually passed on to all employees in America, the cost to businesses would be approximately $33.37 per hour (average employer costs for employees as of September 2015) times almost 151 million workers, or approximately $5 billion dollars. No wonder many businesses have salaried employees working for free.

Leap years have other unusual money effects. With some banks, interest calculations can include that extra day in the basis for calculations, effectively cutting your interest rate by a tiny bit. How tiny? For reference, the difference in $100,000 earning 1% interest for sixty days between a leap year and non-leap year is approximately 45 cents.

On the positive side, leap years mean an extra day of many services with monthly subscription rates such as Netflix or other streaming services, cable TV, insurance coverage, and even the rent on your apartment. Enjoy your free services, but be careful of those that have a monthly limit like data plans. You probably will not receive any slack because of the extra day — after all, it is still the shortest month of the year even with an extra day added.

Feeling lucky? You can take advantage of many special travel and casino deals set up for February 29, and even try to take advantage of the stock market. Since 1928, the S&P 500 has only suffered three losses — but one of those was a whopper loss of 37% in 2008.

As far as the Presidential campaigns go, we assume it is just a coincidence that they align with leap years. Unfortunately, nowadays that just means an extra day of campaign ads.

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Erin | 02.25.16 @ 16:00
I never thought about how an extra day a year actually affects things so much financially. Very interesting article with a lot to think about. Thanks!
Brittany | 02.25.16 @ 16:01
Because it only comes around every few years, I never took into account that it could affect people in a negative way... interesting.
Carla | 02.25.16 @ 16:02
My better half is an hourly employee so it doesn't effect him. And ugh for the extra day of campaign ads.
Steffanie | 02.25.16 @ 16:02
Never thought that I would be working for free. A new look at leap year day. Interesting information.
Kailie | 02.25.16 @ 16:03
I never considered this. This is actually interesting, since leap year only comes around every 4 years.
irene | 02.25.16 @ 16:07
I never thought about that at all, but I don't work outside the home and my husband gets paid by the hour
Elaine | 02.25.16 @ 16:09
Never thought about this but I find it quite interesting. No idea it would affect things in the pockets.
gracie | 02.25.16 @ 16:10
I can see how a lot of salaried workers will end up working essentially for "free" but honestly in my experience you end up working for free a fair amount of the time so this one doesn't make the biggest financial difference to me. I have to admit though it never even hit my radar as a free day they would get!
Tina | 02.25.16 @ 16:10
I never even considered this. What a bummer! Yes, I'm working for free on that day! Of course, I get paid twice a month so really, I'm still gaining a day with February being the shorter month. I guess I technically work free on the 31st of each month, too :-)
Daniel | 02.25.16 @ 17:58
Having never been a salaried employee I never gave any thought to how a leap year could / would effect those that are. I like to see that there are steps in pace to see people are treated fairly .. As for it also being tied to political campaigns that is just a mean joke adding a day to those
$commenter.renderDisplayableName() | 10.21.20 @ 12:59