Companies are often faced with making payroll corrections for hours shorted in a previous pay period. Depending on the arrangement with the employee, companies may issue another check immediately to pay the missed hours, while others might prefer to make it up on the next pay period’s payroll check. Both procedures are outlined below.
Tip: In order for the wages to be properly taxed and reported on we recommend the hour shortages be paid back using Timekeeping (not using Other Compensations for missed wages or Other Deductions for overpayment of hours).
To adjust hours missed in a previous pay period
Determine whether you are going to issue a new check right away or whether you are going to add these hours to the employee’s next pay period check.
To Issue a second check
- Enter the hours within the proper pay period that they were missed.
- Determine whether Overtime is to be paid.
- If there is no overtime situation, you can go ahead and enter the hours using an Hours Type that would have normally been used.
- If there were hours overpaid, and you still have the check in your possession, then you could void the original check and reissue a new one after entering the proper timekeeping.
Note: Payroll processing does not look at any hours that were already paid. If overtime needs to be paid for the hours, you will want to use an Hours Type that is set up for Overtime Always.
To adjust on the Employee's next check
- Enter the hours through Timekeeping using the proper Hours Type. You typically would not want to use an hours type that is subject to system calculated overtime since the check will include current pay period’s hours.
- Enter the hours using an Hours type set up for the appropriate purpose.
- Adjustment – Exempt from Overtime
Use an hours type exempt from overtime if the hours missed in the previous pay period were not overtime related. - Adjustment – Pay Overtime Always
Use an hours type set up to Pay Overtime Always if the hours missed in the previous pay period would have put the employee into overtime.
Notes
The tax jurisdictions that apply to these wage adjustments can only be determined properly if they are treated as Wages. This means, they must either be paid as Salary, or Hourly wages (using Timekeeping).
Making up lost hours through Other Compensations or decreasing wages using Other Deductions, is not recommended, especially if the hours adjustments involve Jobs with differing tax jurisdictions that differ from the employee’s normal tax codes (set up in the Employee Master File – Tax Information screen).
Since many of the WinTeam reports (Hours Budget Comparison, Timekeeping, Job Cost, and On Screen Job Cost reports) are Hours related, you can ensure that your reports reflect the correct hours and average labor rates by entering this information through Timekeeping.