Finance News & Insights

Where 82 million workers think Finance can improve its payroll processes

Despite the widespread use of complex and sophisticated systems, it looks like most payroll departments are still making some critical mistakes — and those mistakes are making employees very, very unhappy. 

A recent study by the Workforce Institute at Kronos found that a staggering 82 million employees — more than half of the U.S. workforce — have found an error on their paycheck at one point.

Too little, too much or too late

Here’s a breakdown of the top Payroll mistakes that hourly workers reported finding:

  • 26% of hourly workers have been paid too little
  • 15% have been late, and
  • 6% were overpaid.

For salaried staffers, the breakdown was:

  • 15% were paid too little
  • 16% had been paid late, and
  • 23% said they were paid too early.

The study also found that 35% of employees have seen mistakes on their W-2s at year-end.

Financial chiefs can use this information to warn the folks in Payroll about the more common mistakes their peers keep making.

Giving money away

While any Payroll errors are problematic, overpayments are arguably the worst type of mistakes these staffers can make. And these errors are happening a lot. In fact, 13.6 million employees from the study said they were overpaid at least once. What’s worse, there’s little chance Finance will ever recoup an overpayment.

The majority of staffers who admitted to being overpaid said they wouldn’t report the mistake unless it was for a significant amount of money.

How much money? On average, it would take an extra $463 for employees to report the issue to their employer.

Broken down between salaried and hourly workers, those amounts are $735 and $160, respectively.

The study also found some significant differences between genders regarding overpayments. Women would take up $258 on average, while men would try to sneak off with an extra $623.

Tax, deduction confusion

Finally, the study highlighted some of the major confusion areas for workers regarding their paychecks.

Forty-two percent of staffers say taxes and deductions are confusing and difficult to understand, and 45% say they’d feel more engaged if Payroll explained the impact of taxes and deductions on their overall earnings.

One way Finance can help: Put together a short cheat sheet that highlights the taxes deductions employees are likely to face.

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