Q&A: When your payroll service makes a mistake

October 3, 2008

We've recently discovered that our payroll service stopped taking health benefits payments out of participants' paychecks a year ago. What should we do?

Q: We pay one-half the premium for health insurance for a single person for employees who choose to participate in the plan. We've recently discovered that our payroll service stopped taking this amount out of participants' paychecks a year ago. It is partly the fault of the payroll service and partly our fault for not noticing. Do we insist that our employees (who do not earn a lot) pay us back, or do we swallow the amount, which could be significant?

A: You should explain to the staff and arrange for them to have the amount that is owed to be taken out over time, rather than all at once. Requiring your employees to pay the entire amount at one time would be punitive.