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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
If it's not a large group, go ahead and follow your usual payroll process for that pay period and manually adjust the paychecks to show the correct amount.
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.
- 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.
1. Introducing Yourself
Your introductory email needs to pack a lot of information into a small package. Try something like this:
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Hello Jane,
My name is John Doe and I work for ABC Agency, where we provide business insurance policies to many of Dallas' rockstar small businesses.
Congratulations on your new business, Jane's Bakery. Are you wondering if you have all the insurance you need? Or if your policies will really cover you in a pinch?
At ABC Agency, we pride ourselves on providing robust, comprehensive coverage options to companies like yours with flexible, pay-as-you-go plans.
Are you available this week to talk more about how we can help? I can help you find the most affordable rates and the best policies out there.
I look forward to speaking with you soon.
Cheers,
John Doe
2. Presenting a Quote
Once you've met with your potential client, a quick reply with their quote will get the ball rolling.
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Hi Jane,
Thanks so much for meeting with me this morning. I loved touring Jane's Bakery–I can still smell those delicious chocolate chip cookies baking! You have a great location, and I'm sure you're going to do great on Front St.
After reviewing my notes, I've pulled together an insurance quote for you (attached). I recommend a business owner's policy. A BOP includes several insurance products in one: liability, property insurance, and business interruption insurance. It offers robust coverage at a competitive price.
I'll call you in a few days to see what you think about this insurance plan. In the meantime, if you have any questions, don't hesitate to email me or call me at [phone number].
Again, thank you for your time today. I look forward to working with you in the future.
Cheers,
John Doe
3. Thanks for Purchasing a Policy
Gratitude is important! It's never a bad idea to thank your clients for their business.
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Hi Jane,
Thank you for choosing a business owner's policy with ABC Agency. We know it's so important to get the right coverage for your business, and we are honoured you've placed your trust in us.
We're excited to work closely with you, and our no. 1 goal is to make sure you're business is always protected.
Do you have any questions? We are here to help. Reach out whenever something comes to mind.
Thank you again for choosing ABC Agency to insure Jane's Bakery.
Cheers,
John Doe
4. Welcome Email
A welcome email helps clients feel like you're there to help–and can softly pitch other insurance products you offer.
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Dear Jane,
Welcome to the ABC family! We are thrilled to have you as a new customer and can't wait to meet all of your insurance needs.
As an independent insurance agency, we work with multiple insurance providers to find the best coverage options for all our customers. If you need any other type of insurance–like [include additional offerings unique to your agency, like life insurance, health insurance, home insurance or anything else]–we can help you too.
Do you want to discuss any of these policies?
Cheers,
John Doe
5. Introducing a New Product
A happy client may want to expand their business with you.
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Hello Jane,
I hope all is well with you and Jane's Bakery. I stopped in yesterday for a blueberry muffin and coffee, and they were delicious. I loved the hint of cinnamon in the muffin! Was that your idea?
I wanted you to be the first to know we are now offering commercial vehicle insurance to our policyholders. Auto insurance for your catering vans is super important since your personal car insurance won't cover them.
We're offering this insurance coverage solely to our current business clients at the moment and have some very competitive rates.
Would you like me to work up a quote for you?
As always, thanks so much for being a part of the ABC family.
Cheers,
John Doe
6. Asking For Referrals
Once your relationship is established and comfortable, let your clients help you grow.
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Hi Jane,
You've been a valuable member of the ABC family for two years now, and we so appreciate your business–not to mention the muffins you supply for our monthly meetings!
Because you are a valued policyholder, I wanted to ask a quick favour. I know you are active in the local Chamber of Commerce, and I'm hoping you might know some colleagues who would benefit from working with our insurance company.
Referrals are one of the most effective ways to connect with our community since people really trust their friends, family and colleagues. Is there anyone you'd recommend I speak with?
Remember that in addition to business insurance products, we offer everything from life insurance policies to pet insurance.
As a thank you for your help, we will send you an Amazon gift card of $100 when your referrals buy insurance from us.
Thanks so much for your help!
Cheers,
John Doe
7. Policy Renewal
If your client needs to renew their policy with you, send an email like this:
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Hi Jane,
I hope you're doing well! What a year it's been—from being listed as one of the top 5 bakeries in Dallas to being an official vendor for the city—you have so much to be proud of.
Just a heads up that your business owner's policy is up for renewal soon and will expire on June 15, 2023.
If you're still happy with the coverage, we can easily renew it for you.
Do you have some time to chat this week?
Looking forward to serving you again!
Cheers,
John Doe
