How do automatic Adjustment Plans for under-deducted employees work?
When Zenefits detects that an employee was under-deducted for their benefits, payroll administrators can make their own adjustments in payroll, or use the adjustment plans that Zenefits automatically calculates to temporarily increase their deductions until the difference is repaid.
Each adjustment plan has 3-4 stages:
- To begin, the employee's per-paycheck deductions increase 2x the correct amount. (Why?)
- These 2x deductions continue for one or more paychecks until the remaining unpaid amount is less than 2 x the correct amount.
- Deductions for the next (and final paycheck) include the remaining unpaid amount (if any).
- Deductions return to normal in the next pay period.
In some months, there is a third paycheck for bi-weekly employees and a fifth paycheck for weekly employees. If these employees have catch-up deductions, up to 2x the normal deduction amount will be taken from the third or fifth paychecks. Any deduction amounts in these paychecks are 100% catch-up deductions.
An employee with a normal semi-monthly deduction of $100 ($200 monthly) was under-deducted $120 for the previous month, and will have $320 in deductions over the next two paychecks to catch up.
|1st paycheck||$200 ($100 x 2)||$20|
|2nd paycheck||$120 ($100 + $20)||$0|
An employee with a normal weekly deduction amount of $80 ($320 monthly) was under-deducted by $180 for the previous month, and will have $500 in deductions over the next four paychecks to catch up.
|1st paycheck||$160 ($80 x 2)||$100|
|2nd paycheck||$160 ($80 x 2)||$20|
|3rd paycheck||$120 ($80 + $20)||$0|
An employee with a normal bi-weekly deduction amount (by Zenefit's Method 1 for bi-weekly deductions) of $100 ($200 monthly) was under-deducted by $400 for the previous month. If current month has three paychecks, this employee will have $600 in deductions in the next three paychecks.
|1st paycheck||$200 ($100 x 2)||$300|
|2nd paycheck||$200 ($100 x 2)||$200|
Thank you for the feedback!