Definition
Off-cycle payroll is a payroll run processed outside an employer's regular pay schedule. Employers use it to pay bonuses, correct errors, issue final pay to departing employees, or pay new hires early. Each run is calculated, taxed, and recorded separately from the regular cycle but feeds the same tax filings.
Also known as: off-cycle payroll run, off-cycle pay run, special payroll run, manual check run
How it works
A payroll administrator opens a separate run, selects the affected employees, and enters only the earnings or adjustments being paid. The system calculates withholding and deductions for that run alone, then produces direct deposits or checks on a date unrelated to the regular payday.
Tax treatment depends on the payment type. Bonuses and similar payments are supplemental wages, which can be withheld at a flat rate or combined with regular wages, depending on how they are paid. Corrections need extra care: an underpayment is usually fixed with a supplemental run, while an overpayment needs a recovery plan consistent with state law. Payday rules vary by state, so many off-cycle runs are triggered by those schedules. Every run still flows into quarterly and year-end tax filings and general ledger totals, so records should note the reason for each run.
Example
A 300-person company discovers that a shift differential was omitted for eleven employees in the last pay period. Payroll opens an off-cycle run on Wednesday, pays only the missing differential with the associated taxes, and deposits it two days later instead of waiting for the next regular payday.
How it differs from similar terms
Off-Cycle Payroll vs Payroll Tax. Off-cycle payroll is a timing and processing event, while payroll tax is the withholding and employer liability that every run, regular or off-cycle, generates.
Related terms and guides
Frequently asked questions
When should an employer run off-cycle payroll?
Common triggers include correcting underpayments, paying bonuses or commissions on a separate date, issuing final pay when a state sets a short deadline, and paying new hires or rehires who missed the cutoff. Employers should avoid routine use, because each run adds processing effort and reconciliation work.
How are bonuses taxed in an off-cycle run?
Bonuses are supplemental wages. According to IRS Publication 15, the withholding rate on supplemental wages is 22 percent, or 37 percent once supplemental wages paid to an employee in the calendar year exceed $1 million. The publication also distinguishes wages combined with regular pay from wages identified separately.
Do state payday laws affect off-cycle payroll?
Yes. The U.S. Department of Labor notes that payday requirements differ by state, ranging from weekly to monthly schedules. Employers should make sure corrections and special payments still meet the applicable state schedule, and should confirm any other timing rules with the relevant state labor office.