This is not the first time that CIGNA has made the reduced paycheck announcement to its exempt workforce. In 1992, CIGNA looked at the calendar and made the same decision, and likewise the same reaction came from employees – anger, according to a Hartford (Connecticut) Courant report.
In 1991, when CIGNA announced a similar paycheck action for 1992, some employees complained it was a pay cut, calling it “an insult to our intelligence” and “simple greed.” To alleviate this problem in the future, CIGNA conducted employee focus groups on the possibility of changing to a twice-monthly payroll schedule. However, employees baked at the idea, saying they like getting paid every other week.
The quirk in the calendar occurs every 11 years, and poses a quandary for companies such as CIGNA that pay workers every other week and would end up giving employees an unearned increase by leaving check amounts the same. Some other companies will avoid the 2004 problem because they have a twice-a-month paycheck schedule so there will be always be 24 paychecks every year. Alternatively, other companies opt for a computation of daily salary rates, and multiplying the daily rate by the number of days in a pay period.
However, CIGNA saw tens of millions of dollars of added payroll costs in an alternative paycheck schedule and opted to keep the same schedule in 2004 as in other years.
In a memo to employees, CIGNA said it was announcing the adjustment now so employees will have plenty of time for personal budget planning. For example, an employee who makes a $35,000 annual salary will get 27 paychecks next year of $1,296 each (before deductions), the memo explains. That compares with 26 paychecks of $1,346 each – a difference of $50 in each paycheck. Regardless, at the end of the year, both ways add up to roughly $35,000.
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