Technically speaking, how long does an employer have to fix a payroll error? Unfortunately, this is a complicated question. The federal government does not specify an exact time frame. Instead, they indicate that wages should be paid promptly. This means that any employer that delays in paying employees on time may be violating the law.
In this article, we will cover exactly how long employers typically have to fix an error and common errors they should try hard to avoid.
Payroll Laws By State
Most of the specific legislation surrounding payroll correction exists on the state level; the verbiage and intent of these regional laws vary greatly from state to state.
For instance, California requires that employers make financial amends within a 13-day period. However, the Golden State only allows a 72-hour grace period for final paychecks, and there are even more rules attached to holiday pay.
Texas handles matters quite differently. It gives disgruntled employees 180 days to file for action. However, employees do not have to “exhaust administrative remedies” before taking you to court.
So how long do you really have to fix an error in payroll? Fortunately, this is not a complicated question. An owner has to emotionally invest in a company to make it run, so it is easy to forget that employees are not as invested as you are.
Even employees who seem to take payroll mistakes in stride want you to fix this problem immediately. Prioritizing worker payment helps keep their home life stable and is seen as a sign of respect.
Three Common Payroll Errors to Avoid
Error #1: Neglecting Overtime Pay
It is easy enough to do. You have a great employee who does little extras, and times are tight.
It is just a half hour here and there. Maybe they are going five minutes out of the way to drop off some tools on the way home. Should you still pay this employee overtime? Yes, you should.
First of all, the current ruling is that employers are required to pay for every extra second their employees work, even if the overtime hours have not been authorized. Businesses found violating this statute can be charged as much as $1,100 per incident.
Error #2 Missing the Payroll Deadline
This error is most common in smaller businesses, where business owners often also play the role of HR director, among other things.
The tight-knit atmosphere of small businesses may make these delays easier to overlook also to avoid such mistakes employers are now switching to payroll software. However, an unknown grudge, personal problems at home or a new employee can bring matters to a head. Every state has its own payday deadlines. Make sure you know what they are for your state and stick to them.
Error #3 Misclassifying Employees
Often, larger companies with mixed forms of employment will run into this problem. Typically, new hires will be mistaken as contractors. Because a new hire may be overwhelmed with starting a new job and unaware what to expect, this issue can go undetected for several months.
Fixing this problem isn’t always as easy as simply paying a new hire the money that is owed. What happens if the employee is suddenly in need of an expected insurance plan that isn’t there? What about straightening out the back paperwork with the IRS?
Even in large companies, there is generally a formal greeting that is issued to new workers. It is a good practice to make sure that a kindly worded statement of an employee’s status is issued from HR along with a request for verification.
Bottom Line: Good Payroll Practices Lead to Loyal Employees
Payroll problems can create a lot of chaos, but most are fortunately easy to avoid and correct. Being aware and taking a few extra steps can help make for a steady payment system and a harmonious work environment.