To help maintain employee satisfaction, employers must be sure to pay their employees accurately and on time. However, mistakes happen, even on paychecks.
When there has been a mistake made on a paycheck, employers need to fix the problem as soon as possible and keep the employee updated during the process.
How long does an employer have to correct a payroll error?
There is no federal law stating how long employers have to correct a paycheck mistake. However, this does not mean employers can just take their time, especially if they have underpaid an employee. All states have their own laws regarding how soon an employer needs to pay an underpaid employee.
For example, in Utah, employers must correct the payroll mistake within the next pay period following the employee’s written request for correction. This differs from Florida’s law which states that employers have 15 days to correct a paycheck error for employees who are being paid minimum wage and the underpayment violates the state minimum wage laws.
It is important for employers to check their state’s labor laws so that they can avoid fines and penalties.
Common payroll errors
Here are some of the most common payroll errors that need to be avoided.
- Overpaying or underpaying employees
- Missing the first paycheck for new hires
- Deducting the wrong amount for benefits
Misclassifying employees and contractors
Classifying employees as independent contractors or 1099 contractors may appear to simplify payroll, but if done incorrectly, can open the employer up to serious fines. Make sure you understand the rules.
Failing to properly track employee hours and overtime
- When employees are working during break times
- The time employees spend traveling between work sites
- When employees are required to participate in activities outside of normal work hours
Tips to prevent payroll mistakes
It is important to prevent payroll mistakes because it can lead to fines and penalties, as well as employee dissatisfaction. So, here are some tips to prevent payroll mistakes:
- Work with a Professional Employer Organization (PEO): PEO’s are co-employers that can do all of the tedious work for your company. For example, here at Helpside, we specialize in processing payroll for companies. Instead of employers having to worry about processing payroll and creating errors, Helpside would take that burden and do it for your company. Working with a PEO is beneficial for minimizing payroll errors.
- Proper training: Making sure all managers have a basic understanding of wage payment laws will help minimize the number of payroll errors. If your management team is inexperienced, make sure they know who to go to with questions.
- Provide your employees with the necessary resources: Make sure that the individual or vendor responsible for processing your payroll has all of the necessary information needed to accurately process the payroll. This can include information regarding an employee’s payroll taxes, benefits and deductions, hours worked, time off, gross wages, and pay rate.
Payroll mistakes can be costly and cause employee dissatisfaction, so it is important to know how long an employer has to fix a payroll error, what the common errors are, and how to prevent them. If you have any questions regarding processing payroll, reach out to us at firstname.lastname@example.org.