Human Resource Blog

Payroll error leads to time off approval

If an employee has taken XX hours of time off and the time is not deducted from the payroll system and the amount of leave time printed on a earning statement shows that they employee has 2 weeks available are you required to follow the printed time? The error has been corrected in the payroll and the employee has not earned enough time off for the request, but the employee has received approval from thier supervisor to take the leave time requested. Are we required to grant “paid leave”? What actions should be taken?

There are two separate problems here — the inaccurate payroll records (or check stub) and the supervisor approval.

An employer who makes a mistake on the payroll records can certainly correct it to show an accurate number of hours available. A pay stub is not a binding contract — employers can and do make mistakes, and can correct them.

The supervisor giving verbal approval for time off that the employee is not actually entitled to is more problematic. Ideally, there would be checks and balances in place to prevent this. In many companies, the employee has to fill out a form to request time off. The for goes first to payroll or HR, and after they have approved it (meaning the employee genuinely has the accrued vacation or PTO) it goes to the supervisor to be approved or denied, based on business needs. You should implement such a system of checks and balances now. In many states, if the supervisor has promised the employee paid time off verbally or in writing, the employer must honor it — even if the supervisor was misinformed.

Many states allow you to pay the employee for PTO or vacation that is not yet accrued, and deduct that balance from the employee in the future. Example: Jane takes 32 hours of vacation this week, but has only 16 hours of vacation accrued. The employer pays Jane for the entire 32 hours, but when she has accrued 16 hours, that amount will be deducted from her accrual balance, leaving her vacation time at zero. In essence, Jane is *borrowing* future paid time off from the employer and paying it back. (The employer is basically advancing Jane an amount equal to 16 hours of vacation. In almost every state except California, if Jane quits or is terminated before she *pays back* that 16 hours of vacation, it can be deducted from her final paycheck, as long as the employer has written permission to do so.) You could try to recoup the paid time off in this way, but you will need written approval from the employee.

Otherwise, you could try just not paying the employee for that portion of the time off, but in many states if the employee takes it to the Department of Labor, they will file suit if necessary to see that the employer honors benefits and wages promised by the supervisor.