West Virginia University, one of the largest employers in the state, recently announced a payroll error that resulted in some employees not receiving their direct deposits in mid-August (2018). The mistake is not the first for the university. In fact, another mistake relating to missing data prevented thousands of employees from receiving their pay prior to the Thanksgiving holiday in 2017. The error was not corrected until after the holiday weekend.
The good news for affected employees is that they were protected. Following this most recent mistake, university officials established procedures for assisting employees in the event they incurred overdraft charges or any other fees related to their missed deposits.
The lesson to be learned here is two-fold. First, there’s no possible way to completely eliminate all payroll mistakes. Things happen. Neither people nor machines are perfect. The second lesson, which is arguably the more important of the two, is this: how payroll mistakes are addressed makes a real difference.
Covering Financial Losses
West Virginia University did the right thing by assisting employees who were financially affected by the payroll mistake. That should be the bare minimum for any employer. Workers deserve to be paid every penny they earn regardless of the method employers choose for paying them. If an employee is forced to pay overdraft fees as a result of the employer’s mistake, that worker is not receiving his or her entire pay. Part of the pay is going to fix an employer mistake.
Employers should do right by their workers in terms of financially protecting them in the event of a payroll mistake. Remember this: payroll processing is completely out of the hands of workers. They are at the mercy of the payroll department or the company’s third-party payroll provider. They should not bear the burden of mistakes over which they have no control.
Transparency in Reporting
Next up is the way in which employers choose to report payroll problems. According to BenefitMall, the average employee will forgive honest mistakes as long as they perceive that their employers are being transparent and truthful. Employees don’t tend to get upset unless they find out they’re being lied to.
If a mistake prevents employees from being paid on time, the best option is to simply tell the truth. Let the employees know what the problem is and that it’s being worked on. And if the real problem is that the employer is in financial trouble, workers deserve to know that. Their first obligation is to themselves and their families. They need to know whether their own financial futures are in jeopardy.
Backup Systems and Redundancy
Smart business people never rely on a single system to do everything. They have backup systems and redundancy in place, just in case something goes wrong. Needless to say that backup systems and redundancy are a must for the payroll department. There needs to be a way to quickly respond so that, even in the event of an otherwise crippling incident, employees still get paid on time.
To not have backups and redundancy built in to the system is to tempt fate. That’s why companies offering cloud-based payroll don’t rely on a single server in a single location. They have a main server plus multiple backup servers in separate locations that guarantee very few, if any, disruptions in service.
Payroll mistakes happen. They know that all too well at West Virginia University. The university’s payroll department also knows that how mistakes are handled makes a big difference. That’s something every payroll department in the U.S. should know and understand.