The Lion, The Witch, and the Ex-employee that kept the $5,800 Payroll Error.

dwebb — Thu, 09 Jul 2020 12:00:00 +0000

Sometimes things happen, and sometimes, just sometimes, there is a perfect @#$% storm. Below is a scenario that happened to one of our amazing Nonprofit clients. Really, it is something we are still dealing with here at Giving Payroll, and by dealing with I mean my direct ADP rep received a call from me screaming and she graciously picked up the “I’m dealing with this” hammer, but we wanted to write up the lesson learned here, and believe me there are a few lessons learned.

The Lion

Back in February one of our amazing super-duper awesome nonprofit clients had to let an employee go. Sad I know, but a necessity sometimes. They went into their ADP Run platform changed the employee’s payroll amount in their profile (tisk tisk but we will get to that later) to include severance and marked the employee terminated as of the termination date. They processed their last pay and then the following payroll everything went smoothly and the ex-employee was not paid. The payroll after that though, and many to follow well that’s a different story…..

The Glitch is a Witch

There seemed to be a glitch in the system on the second payroll after the employee was terminated. We are not sure how, but payroll mistake God’s were smiling on them and the employee was being paid every payroll after that. Being just a service provider, we do not know who should and should not be paid, we never question that or we would never submit payroll! Per our client, in the system, and in the initial payroll screen the old employee was not showing up and was still marked “terminated” in the system as of the end of February. Fast forward 5 payrolls and many after-work cocktails later the client noticed that the terminated employee was on the payroll report and contacted us. We contacted ADP, put a stop on the most recent payroll direct deposit since it was still the day before the direct deposit date, and voided the other checks in the system to ensure the W2 was correct.

Just to make sure we covered all of our basis, we contacted our direct representative at ADP that always goes above and beyond with making sure our clients are taken care of, just so she was informed of the situation. Her exact words were “There’s no crying in baseball!” or maybe it was “What do I need to do to help?” I dunno my memory isn’t what it used to be.

The Ex-employee that kept the $5,800 payroll error

At this point, we decided that I would give the ex-employee a call since I was a third party and she might be more receptive to someone else. My initial reaction is ok, I am a super perky guy, like perky as in I am super friendly annoying sometimes! So the plan was I am just going to give her a call be super nice and if she does not pick up, I will be vague and leave a voicemail.

See the employee was using a NetSpend card to receive her direct deposits, our assumption was maybe she did not know about the direct deposits because who is going to keep a bunch of money that is not theirs?? That is not how the world works, even though some seem to think so. So I left her a super nice voicemail, saying I was calling from Giving Payroll regarding a payroll error and I would appreciate if she would call me back. Three days go by, nothing. SO I talked with the client and we come up with a plan because we still think she does not know about the money…we know, we know, naive but the benefit of the doubt and all.

So I go into our QuickBooks and attempt to draft the prior payment back out on our side, mind you this did not make my bookkeeper happy when she found out I did this, but that is a whole different story in itself. If it gets rejected we know she knows about the money and has kept it, if it clears, great its there and we will just draft it all back and I will transfer it over to the client easy peasy lemon squeezy!

Annnnnnnd the payment got rejected. @$%&sicles

To make matters worse, ADP service center comes back with two things. 1. The employee was not marked terminated per their “Audit” until the day I called them. Well, from our side of things, that is not correct. My client, an ADP service rep, and I all saw it was marked terminated back in February. So magically my client and I are wrong, and the nonprofit is just out of luck. 2. To make matters worse that response was sent from someone overseas in an “Oh well, too bad, so sad, tough luck” toned email. Like a $5,800 error to a nonprofit is nothing to them. Now mind you, our direct ADP representative was very on top of this and never took this approach, and immediately took over the situation after listening to me have a meltdown on the phone while I chained smoked and drank whiskey but again, that’s a different story.

The Cherry on top: We receive a notice from ADP that the very last direct deposit that I called them and stopped before the payday was rejected back by NetSpend…yeah that is right. Since the ex-employee knew about the payroll errors and NetSpend gives people the money right when they are notified, they facilitated in the theft against a nonprofit and instead of them taking the loss (Because really, just like a bank would do, NetSpend should send the money back as long as it was requested within 5 days and go after the employee for the overdraft), the nonprofit has to apparently eat it.

Lessons Learned & Tips

· Severance should never be just added to a salary amount-Lesson Learned: There should be an Earning set up for Severance so your reporting will show the severance and will not skew your numbers. If you do not see an earning for severance, please contact your payroll provider so they can set that up.

· Checks & Balances-Lesson Learned: After terminating an employee you should check for 4 pay periods that they are not included before submitting and after.

· Checks & Balances-Tip: Always put the exact date of termination since payroll is based on your payrolls specific pay frequency (i.e. 1^st – 15^th)

· Proof-Lesson Learned: For the love of everything if you see an error take a screenshot. When you deal with a large organization things can get lost in the shuffle or a fix can make something look one way when it is really another and you have no proof. It is the nature of the beast when you deal with a large organization, ADP in our opinion, is still one of the trusted go-to service providers. Just know things can happen anywhere, regardless of prior track records.

· Delete Terminated Employees Bank Accounts-Lesson Learned: If we would have removed the bank account numbers from the system they would have never received the direct deposit and the client would have known right away when a check showed up at their office.

· Final Paycheck-Tip: Paying terminated employee’s final check via a paper check instead of a direct deposit will accomplish a few things. 1. It will ensure if a payroll mistake happens a direct deposit will never be sent, but a paper one instead, and to the office. 2. It will protect the organization against someone that would take an opportunity that was not only morally wrong but legally wrong as well.

Next step with the $5,800 owed: With no one claiming responsibility and us unable to reach the ex-employee we are forced with the only action we can take…contact the po-po. Look we tried keeping the fuzz out of this, word on the street is snitches get stitches but there are federal laws in place to protect employers from payroll mistakes for a reason. Regardless if the employee still works for the organization or not. It is the employee’s responsibility to return any over-payment in payroll, and over-payment in payroll is still the property of the organization that pays you and depending location and amount it could be considered Felony Grand Theft, as it is in the scenario. Like, enjoy spending all that alone time with Bubba in a jail cell felony. No one wants any of that.

Personal Opinion: ADP was wrong in not providing more back end support in the scenario as my direct ADP representative can only do so much. NetSpend was wrong in rejecting the last direct deposit like they were a getaway driver in a bank robbery, the ex-employee was wrong in stealing the money from a nonprofit like they were the Grinch in Whoville, and the Nonprofit was wrong for not having checks & balances in place and not paying attention to their dang payroll reports.

Like we said earlier we still stand by ADP as one of our trusted payroll partners at Giving Payroll. No one is perfect, and if you are looking for error-free service you will be looking for a long time, and you will end up sorely disappointed because it does not exist, anywhere, in any industry. But having checks & balances in place as well as a payroll partner you can depend on is important. With Giving Payroll you are never alone, you always have the support of your Account Manager and more importantly Giving Payroll as a whole.

About The Author: David Webb is Co-Owner and Director of Nonprofit Services at Giving Payroll, as well as the lead Awesomenessologist at Give Nonprofits! David has been working with nonprofits for over 10 years and understands the unique requirements needed to succeed. To learn more about David check out his trainer profile here at Give Nonprofits!

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