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Bizarre payroll error...any others?

I'm researching a payroll error and can't find another instance of this occurrence:

Have you ever heard of a payroll error that underpaid EE 4 weeks a year?

Example:
Semi-monthly payroll
Calculation used: Weekly hours 10 and hourly rate $10 = $100 x 4 weeks/month = $400 monthly x 12 = $4800 (paid $200 twice a month)

Thus,
-2 semi paychecks
Or shorted a Kodak month (28 day month, 13 months)?
Or only being paid 1st 28 days of month?

Is there a term for this specific error or type of error? Or a conversion term?
I'd like to find actual documented examples of this error in wage & labor terms and having no luck. FWW resembles the intent and similar errors can be made but this particular error seems rare. It sounds intensely stupid to anyone that knows payroll and an impossible error to be made if you're doing what you should.

Any terms for schedules, conversions or any guidance to help me find another instance would be much appreciated.

Thank you!

Comments

  • You might want to re-check your math. Semi-monthly payroll means you take the entire year and break it into 24 payrolls. At one point you say that there are 4 weeks a month, which is not true. There are 52 or 53 weeks in the year, so 52/12 does not equal 4, but rather 4 and 1/3 weeks each month. The law does not care what your so-called annual pay rate is. If you are paid hourly, then the law looks at your hourly rate. If you are paid salary then the law (mostly) looks at your salaried rate. If I understand your question you are trying to annualize a SM payroll number by playing games with the actual number of weeks associated with that payroll to come up with an inflated annual salary number, which you are then going to try to claim from your employer. Legally that argument is meaningless. No such thing as an annual salary legally and there is not exactly 4 weeks in a month legally. Nice try.

    FenceDwellerrrupert
  • edited March 15

    Nice try but you don't understand.
    The employer contracted to pay 15 hours a week at $15 HR. Annualized at 52 weeks is $11,700
    Instead, the employer paid $900 a month = $10,800 4 weeks shy each year. Breach of contract in addition to 1/2 a dozen other violations.

    Calendar: We use a fixed 12 month calendar as opposed to the Kodak, 28 day months with additional day annually. Most people don't know that. I say this because the employer is a property management company. In trying to offset the rent amount managers pay (rent paid 12 times annually) they likened hourly pay to 4 weeks to arrive at s monthly salary. They did not annualize and divide by pay periods OR you could say without consideration for the "extra month annually OR using our ridiculous calendar disregarded 1, 2, 3 additional days to original 28 day month (fixed).

    Paid 48 weeks a year for 12 years. Essentially, working a year for free. The issue is in settlement talks but class action that affects 50-65 resident managers is looming. The employer has conceded to the error and the practice.

    I am calling this payroll error Sol, which was the name of the 13th month because I can't find a single other occurrence of this. Case law, blogs, DOL, WHD, lists of payroll errors don't mention anything similar.

    I ask again, has anyone ever heard of this idiotic error?

  • Nice try but now you are the one who does not understand. Contract law is legally unrelated to labor law. Of course DOL and WHD (same thing) have no interest in contracts. DOL and FLSA related labor law handles minimum wage, overtime, child labor and NOTHING else. Certainly not contract law. Some states like CA have some interest in labor related contracts, but that is the exception, not the rule. Certainly federal DOL does not care about any wages with or without a contract absent a federal minimum wage or overtime violation.

    If you are actually talking about labor law, then DOL never looks at annualization. Each pay period stands alone. There is a whole lot of FLSA related case law on that, including some SCOTUS decisions on this point. IRS and IRS only for IRC related issues looks at annualization, but this taxes, not wages.

    Take your contract to a contract law attorney. If your contract is being violated, the attorney can tell what remedies (if any) exist. But all contract law is very specific to state law (different state to state) and the exact wording of the contract. If this is CA, then CA-DLSE might take an interest. Or not. But most states consider contract law to be very unrelated to labor law.

  • I appreciate your insight Warren but those aren't the questions. It's not about the agency, it's about the error.
    In this instance the contract serves as an offer letter and lease. And it's being addressed privately and legally without DOL or WHD or any enforcement or regulating agency.

    If you've been reading, the employer follows no general rule, practice, or method.That's why I've looked 'everywhere' for the same error to find what's been done in the past.

    I am trying to find another instance of this happening. If you know of one, I'd love to read about it.

    Thank you for trying, Warren.
    Appreciated.

  • Legally offer letters are almost never enforceable contracts. If you think you have a contract, have a lawyer review it. It is legally difficult to find useful case law precedent related to contract law because that is so very specific to the exact wording of the document and specific state involved. When people talk about case law they are almost always talking about statutory law such as FLSA or IRC.

  • Ok, listen, Lawyer is on it. It's not about the contract.

    If you have not heard of the payroll error before that is all I wanted to know. Everything you're telling me has been addressed. Litigation, class action, arbitration agreement null and void. Contract issue is dead.

    Have you heard of error? Apparently not.

    Thank you.

  • David Warren,

    What do you know about tax deductions? If someone had 2 rates of pay, why would one be taxed more heavily? Or one taxed so slightly?

  • Just to let you know David has been a payroll guru for many many decades! He knows more about payroll and wage law than anyone else that I know. Being rude to someone who is trying to help you (whether you realize you are coming off that way or not, you are) isn't the way to get your questions answered.

    Your question is that your employer made an error over many years, you (and others) are speaking with an attorney about it, you are not filing a state or federal wage claim but hoping to solve it outside of those systems. Employers make mistakes but I doubt you are going to find any kind of documentation on this error as it is one that is pretty simply bad if they calculated it the way you said. That's not the general calculation that is most widely used. And definitely not best business practice. So it's going to be hard to find someone who made the same mistake especially if you aren't filing a wage claim through your state or the DOL.

    I do have to wonder why it has taken 12 years for anyone to notice the difference in the annual amount and the actual YTD on your W-paystubs and W-2? It sounds like your employer has admitted the error which is good thing for you and you will get to some type of resolution and back pay -- but one hurdle is proving what they agreed to in the first place-- annual pay OR the weekly pay that is being paid. And you have to deal with the hurdle of did they ever inform you of the pay calculation change sometime within the 12 year period? Especially since the calculation was accepted for 12 years! (a state/federal wage claim will usually only allow you to go back 2-3 years, so be prepared that the employer may not be willing to pay back the 12 years you think you are owed)

    But I will also say your communication style is hard to tell what exactly you are asking.

    As to your question about tax deductions -- that also doesn't make sense either. You aren't taxed on rates of pay but overall gross pay (after any pretax deductions) on any given check based on the frequency of pay (weekly/biweekly/semimonthly etc). So if your gross pay goes up (say you get a commission this paycheck or a taxable housing allowance), you will pay more taxes on this check as compared to a check on the same frequency for just the base amount. But $10 an hour times 15 hours ($150) isn't taxed anymore than $15 an hour times 10 hours ($150). $10 per hour for 10 hours ($100) will be taxed less than $15 per hour for 10 hours ($150). The only caveat is that supplemental pay (such as a bonus) could be taxed at a higher rate.

    It honestly sounds like whoever is doing payroll for your employer is not doing a good job (or making a mistake) if they can't explain the basic payroll processes to you.

    CaroleNJjadegurl
  • Fence Dweller - when you say two rates of pay, we hear two rates of pay from the same employer - are you talking more than one employer?

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