Payroll errors happen, whether they're due to human error or payroll system glitches. Misclassified workers, incorrect payroll deductions, and more can cause employees not to get the pay slip they expect on payday. Taking the right steps to fix the situation can show employees you value them and are committed to correcting the oversight.
In this article, you'll find a template and sample letter you can customize to let team members know about payroll errors and an action plan you can follow to address the mistake.
Payroll Error Letter Template
Need that template right away? Here's a template you can use to let an employee know about a payroll mistake. Just click "Make a copy" to customize your own.
Payroll Error Sample Letter
Or personalize a sample letter to let an employee know there's been a payroll issue. Just click "Make a copy" to customize your own.
How To Write a Letter to an Employee About a Payroll Error
Sending these letters can be difficult. You might feel guilty about how payroll errors affect employees, even if you take steps right away to remedy them. Meanwhile, employees can feel frustrated once they hear this news—which isn't fun for anyone.
So, how exactly do you write a payroll error letter?
Make sure to discuss the payroll mistake and offer a sincere apology. You'll want to include the following:
- What the error was
- Why it happened
- How the company is going to fix the problem
- When they can expect a resolution
Using payroll software like Hourly can eliminate much of the human error that causes payroll mistakes, such as incorrect data entry or payroll calculations. Whether you're at your computer or on the go with your phone, you can automatically track and calculate your employees' hours, verify everything is correct, and run payroll–all in a matter of seconds.
How Do You Fix a Payroll Error?
Fixing a payroll error is a matter of correcting the payroll before or after it goes out. Here's what to do based on the scenario:
Scenario 1: Several people are affected, and checks haven't gone out
Cancel payroll if you can. Then fix the errors and run payroll again.
Scenario 2: Only one or a few people are affected, and checks haven't gone out
Scenario 3: One or many people are affected, and they've received their checks (or paychecks are late)
If they haven't already approached you about it, you'll want to reach out to employees as soon as you're aware of the error. Below are some steps you can take. You'll want to follow up on your conversation with a written letter.
- Underpayments: With underpayments, the best action is to immediately issue a separate check for the missing amount. You don't want to be liable for any negative personal or financial consequences underpayments could have on the employee. Your state may also have laws requiring you to correct underpayments before the next payroll.
- Overpayments: If the error is an overpayment, then you can deduct the additional amount from the employee's next paycheck (or the next few paychecks) to receive your reimbursement. States have different laws for how long employers have to recoup overpayments, so make sure you know those before adjusting paychecks.
- Delays: As with underpayments, employees have to get their money as soon as possible. The Fair Labor Standards Act (FLSA) considers late payments and non-payments to be the same. Whether you could get hit with a penalty depends on if the delay was beyond your control, such as a severe illness on payroll day or a bank error. Cash flow shortages and similar reasons don't fall under that category. Actual penalty amounts depend on your state's laws.
Late paychecks can also really affect employee morale, so you'll want to be extra sure to take time to offer your sincere apology and explain how you'll remedy the situation.
Keep Payroll Errors from Happening Again
Payroll errors aren't fun for anyone. It adds more work for your staff and can create a negative employee experience. You can easily avoid many common payroll errors by using payroll software like Hourly.
If a paycheck error does happen, move quickly to fix it. That may mean running payroll again, making manual adjustments or cutting additional checks to employees. Be sure to follow up with a letter explaining the situation and solution if an employee is affected.
And remember, transparency goes a long way. So, be honest and offer your apologies—and make sure you answer any questions right away.