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3 Ways Payroll Errors Harm Employees

Payroll errors are more than an administrative hassle. Sure, fixing issues may require long, tedious processes that frustrate everyone involved. But this isn’t even close to the real consequences of payroll errors.

Behind every payroll mistake is an actual employee whose life is suddenly thrown into disarray. This sounds dire because it is. According to a Morning Consult survey commissioned by Paycom, 3 in 5 Americans live paycheck to paycheck. Payroll errors mean turmoil for everyone, but for at least 203 million Americans, they’re devastating.

For each of those millions of people, there are countless ways payroll errors can harm them. Imagine if you were forced to:

  • miss a student loan or mortgage payment
  • choose between buying groceries or refilling a prescription
  • find a ride to work because your debit card was declined at a gas pump

Even worse, payroll errors are often outside an employee’s control.

No business wants to intentionally hurt its employees with payroll mistakes. But the reality is errors can and will happen. In a OnePoll survey commissioned by Paycom of HR professionals:

  • 41% miscalculated overtime
  • 58% experienced issues with direct deposit
  • 62% misclassified an employee’s exempt status
  • 64% had to perform a retroactive payroll adjustment

The IRS is taking note, too. In a recent analysis, the agency reviewed almost 4.3 million civil penalties for payroll errors in 2020 with an average fine of $1,395. Combined, errors like misclassifying employees cost businesses approximately $6 billion that year alone. That price may seem steep, but the personal trauma employees endure from faulty payroll is far worse. Again, payroll errors are inevitable. What makes them catastrophic is when they’re not identified and resolved before payroll runs.

Every employee has a unique background, and some circumstances are more common than others. Let’s consider three types of employees who are particularly susceptible to payroll errors. Keep in mind payroll mistakes could easily push any of them below the poverty line.


Across the country, many employees have to juggle their education with their occupation. Between spiking tuition rates and living costs, it’s harder for college students — even in graduate school — to carve a future for themselves. According to the American Psychological Association, more than 1 in 3 students lack sufficient money for food and stable housing.


As a result, many students have to split their focus between school and survival. A consistent, error-free payroll is key to supporting themselves and reaching stability. For these employees, a delayed paycheck spurred by a payroll error could mean:

  • eviction
  • stress
  • shutting off utilities
  • having to ask friends and family for money
  • increased anxiety and depression
  • dropping out of school

It’s not a stretch to envision how the stress of a missing paycheck could shatter a student’s concentration.

Single parents

There’s a lot on the line when you’re the sole provider for your children. Be it food, clothing, shelter, medicine and more, kids rely on their parents for everything. And according to the National Center for Children in Poverty, 54% of children in low-income families live with a single parent. Payroll errors don’t just destabilize adults; they affect nearly 15 million children, too.

That figure doesn’t even consider another crucial statistic. Given recent inflation, the cost of raising a child through the age of 17 is skyrocketing — $300,000, per a report from The Wall Street Journal. On top of this, a survey from Brookings Institute found 2 in 5 homes of mothers — including single parents — with children under the age of 12 were food insecure. For those already struggling to make ends meet, payroll errors hurl their households over the edge.

There’s a slew of disasters payroll errors could trigger for single parents. For employees in particularly fragile situations, they or their children may be forced to:

  • skip meals
  • experience stress and trauma
  • delay vital health care visits
  • accumulate high credit card debt
  • miss birthday and holiday celebrations
  • go to school without proper supplies
  • make do with outgrown and weather-inappropriate clothing

And all of these could be prevented with the right payroll software. With an employee-driven experience, a single parent could easily tell if their pay had:

  • missing hours
  • miscalculated taxes
  • unapplied PTO
  • inaccurate or absent benefits
  • and more

Not only would they be able to identify these payroll errors, but they’d also be able to fix them before payroll runs.


Retirement isn’t a luxury everyone enjoys. A growing number of employees are forced to remain employed longer than they originally expected. The U.S. Bureau of Labor Statistics projects the number of workers age 75 and over will jump 96.5% by 2030.

For a majority of employees, the “golden years” don’t hold much luster. A survey from LendingClub reveals 54% of baby boomers and seniors live paycheck to paycheck — a 14% increase from early 2021. Skipping meals and passing on medicine is difficult for anyone, but these problems are even more severe for the elderly.


The scope of “basic needs” expands as we grow older. Incorrect payroll could force a senior employee to a make a number of difficult choices, like:

  • putting off heart medication
  • delaying an important surgery
  • missing time with their grandchildren
  • suffering through a chronic illness
  • skipping a trip to the supermarket

Senior employees need their employers to help them survive. Payroll errors are a direct attack on this expectation and their livelihood.

Getting ahead of payroll errors

No employee should have to worry about the accuracy of payroll. But if their organization relies on an outdated payroll technology — one without seamless tools in a single software — what else are they supposed to do?

Luckily, there’s a way to stop payroll problems in advance. Beti®, Paycom’s employee-driven payroll experience, guides employees to find and fix errors before payroll runs — right in the Paycom app. The result? Businesses reap the benefits of:

  • improved accuracy
  • reduced liability
  • increased payroll oversight

Meanwhile, employees gain much-needed clarity and confidence into the payroll process. With push notifications, reminders and the ability to proactively address payroll issues through Paycom’s Ask Here tool, Beti delivers priceless peace of mind.

Are you ready to give employees the assurance they need? Learn more about Beti to see how it keeps worst-case scenarios — like the ones you just read about — from happening.

DISCLAIMER: The information provided herein does not constitute the provision of legal advice, tax advice, accounting services or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional legal, tax, accounting or other professional advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation and for your particular state(s) of operation.