Not paying employees what they have earned is illegal– there’s no way to sugarcoat that. Of course, mistakes happen and no court is going to press charges so long as the repayment is made once the error is noticed. Then again, employees aren’t always correct when it comes to knowing whether or not they were actually underpaid. It’s important to check the situation from every angle before making a move.
Check for Mistakes
The first step in correcting any mistake is to make sure there was a mistake to begin with. When an employee claims he or she is owed retro pay, he or she will usually have some kind of evidence to back up his or her claim. Take the claim seriously and document any evidence the employee has. Below are some common mistakes that could result in an employee being accidentally underpaid.
- Incorrect hours
- Hours input incorrectly into the computer
- Shift changes
- Unapplied raises
- Overtime
- Change in the minimum wage
The most common of these issues will be incorrect hours or overtime. No matter which of these issues come up, it should be easy to double-check to see if there was a computer error with the payment system or something else on the employer’s end.
Of course, it is always possible that the employee is incorrect. This happens when an employee does the math wrong and assumes he or she is owed more money than he or she actually earned. This can also happen for new employees who do not understand taxes, and how they are taken out of checks. If the error is on the employee’s end, simply explain to them how he or she made a mistake. No further action beyond this point is required if this is the case.
Settle Your Debts
In the case that the employee has proved to be underpaid, the employer is legally required to make repayment as soon as possible. This can be done in a couple of different ways. First, you must figure out how much the employee is owed, both before and after taxes.
Next, there are a couple of ways in which you can repay the employee. The first way is to pay them right away with a separate check that is independent of the last or next paycheck. This check would only contain the amount in which they were underpaid on his or her last check. The second way is to add the unpaid money to his or her next paycheck. This is usually the easier thing for business owners to do.
No matter which option you decide to choose, make sure to talk it over with the employee to make sure there are no miscommunications about how the money will be repaid. The smoother the communications during all of this, the smoother the repayment will be in general. The last thing any business owner wants is for an employee to think he or she is not getting what he or she earned and file a legal suit.
Prepare for the Future
If the issue with the check was that the minimum wage changed or an employee earned a raise, then a more permanent change may need to be made in the computer’s payroll system to make sure the same mistake is not made again. This should be a simple enough process for a payroll employee to complete. All they should need to do is change the hourly pay in the computer system. Just make sure that the new settings are saved so they continue to be applied in future paychecks.
So long as all of these measures are made in a timely fashion, there should not be any major legal repercussions from making a mistake on an employee’s paycheck. Apologize for the mistake and take steps to make sure the mistake doesn’t happen again to them or another employee. After all, you don’t need to fix mistakes if a mistake is not made in the first place.