Major Payroll Problems and How to Fix Them

Payroll mistakes suck. Big time. And they seem to be happening more these days.

You’ve probably seen those news stories about huge companies messing up paychecks. Employees had money actually taken back out of their bank accounts! Can you imagine if that happened to you?

Let’s walk through some of the major ways payroll can go wrong. More importantly, we’ll talk about how to make it right.

Shortchanging Employees

The Problem

Recently, some big accounting firms really screwed up. Employees got their paychecks like normal. But a week later, the money was gone from their bank accounts! The companies had to scramble to fix it.

You might think something like this could never happen to you. But even small underpayments hurt. With budgets tight, most people don’t have wiggle room in their finances. Consider this: About half of families have less than $500 in emergency savings. Half of monthly earners say they run out of money between paychecks.

For most folks, every single paycheck matters. If something goes wrong, even by a little bit, it can be devastating.

The Solution

Making sure employees get their full pay means being super vigilant:

• Double check pay rates every year. Job duties and pay grades change over time. If payroll systems aren’t updated, people get shorted.
• Confirm any new tax forms ASAP. When exemptions, deductions, or status changes, the update has to flow through to payroll seamlessly. No lags!
• Watch overtime policies like a hawk. OT rules vary for different roles. Make sure payroll systems calculate OT perfectly for each employee group.
• Review complaints about pay carefully. If multiple people report short checks, dig into the payroll process. It could expose bigger issues.

With a system of thorough checks, you can catch underpayments before payday rolls around. Employees need you to have their back on this. Don’t let them down!

Miscalculating Tax Withholding

The Problem

Taxes are a freaking nightmare. Payroll systems have to account for federal, state, and local taxes. And rates or deductions change all the time! It’s so easy for something to get screwed up.

For example, one large retailer switched to a new payroll system. It messed up tax calculations for thousands of workers. People were missing $200 per paycheck. Just imagine budgeting for your normal take-home pay, then having way less in your account each month.

Tax errors slam employees’ wallets hard. By the time someone speaks up, the damage is done.

The Solution

Payroll taxes are complicated, but you can avoid math mishaps:

• Update rates immediately whenever tax laws change. Don’t let old info linger in the system!
• Have employees verify withholding every quarter. Tax situations can change during the year, so check in.
• Randomly audit a few employees per pay period. Verify their taxes paid line up with personal tax status.
• Document all exceptions and modifications. Note how the payroll system handles unique tax situations.

Being vigilant about taxes means more money in employees’ pockets. They’ll thank you for watching out for them!

Processing Payroll Late

The Problem

For most employees, payday might as well be a national holiday. They depend on checks arriving like clockwork. A delay disrupts budgets and plans.

But payroll systems hiccup sometimes. Recently a hospital’s payroll crashed. Employees went weeks with zero income. Some couldn’t pay their mortgages or buy groceries!

Late paychecks cause real suffering. They also obliterate employee morale and trust. Not cool.

The Solution

Payroll needs to run flawlessly, every time. Avoid lateness with these tips:

• Build in a few days buffer before payday as a cushion. That way, hiccups don’t turn into disasters.
• Have a backup plan with vendors ready in case the payroll system tanks. Know your emergency options.
• Set up alerts if payroll doesn’t run on time. Then you can jump on issues before payday.
• Keep employees in the loop about potential delays. Transparency maintains trust.

Getting people paid on time is Payroll 101. With intention and planning, you can totally nail it.

Final Thoughts

Payroll problems are no joke. They hurt employees and companies too. Many mistakes can be avoided though. Just stay vigilant, act quickly when issues arise, and keep people in the loop.

If you make accuracy and timeliness your priorities, you show employees you have their backs. That builds trust and a workplace people love.