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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:

  1. To begin, the employee's per-paycheck deductions increase 2x the correct amount. (Why?)
  2. These 2x deductions continue for one or more paychecks until the remaining unpaid amount is less than 2 x the correct amount.
  3. Deductions for the next (and final paycheck) include the remaining unpaid amount (if any).
  4. 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.

Examples:

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.

  Deductions Remaining Unpaid
    $120
1st paycheck $200 ($100 x 2) $20
2nd paycheck $120 ($100 + $20) $0
Total: $320  

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.

  Deductions Remaining Unpaid
    $180
1st paycheck $160 ($80 x 2) $100
2nd paycheck $160 ($80 x 2) $20
3rd paycheck $120 ($80 + $20) $0
4th paycheck $80  
Total: $500  

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.

  Deductions Remaining Unpaid
    $400
1st paycheck $200 ($100 x 2) $300
2nd paycheck $200 ($100 x 2) $200
3rd paycheck $200 $0
Total: $600  
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