EY survey: Payroll errors average $291 each, impacting the economy
Payroll errors can cost businesses up to
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One in five payrolls in
The average organization makes 15 corrections per payroll period, according to EY. The effects are costly: lost revenue, hours correcting errors, and potential lawsuits and fines.
“Payroll errors have consequences for employees, businesses and the broader economy,” said
More than 40% of surveyed organizations facing litigation as a result of payroll errors resort to cutting jobs. More than half of those facing regulatory and compliance issues as a result of payroll errors also resort to cutting jobs. Others facing regulatory and compliance issues reported declines in employee morale (41%), fines (15%) and reputational decline (36%).
EY targeted companies with 250 to 10,000 employees and collected responses from 508 individuals who work at companies headquartered in the
Survey results indicate an average 1,000-employee organization spends an aggregate of 29 workweeks fixing the most common payroll errors.
Time/attendance and expense errors were the most common payroll errors, occurring on average more than once per employee per year. Those errors cost about
Payroll error category |
Errors per 1,000 employees, per year |
Cost per 1,000 employees, per year |
Time/attendance and expense |
1,139 |
|
Vacation/PTO/sick time requests |
721 |
|
Benefits |
503 |
|
Schedule earnings and deductions |
410 |
|
W4 and tax allocation changes |
229 |
|
Direct deposit |
159 |
|
The top five most time-consuming errors to fix — time punches, expenses, uniforms charge errors, sick time not being entered and errors setting up health savings plans — take nearly 29 40-hour weeks to fix per 1,000 employees. That’s more than half a work year spent on manual processes instead of strategy to advance a business. Fixing missing and incorrect time punches was the most time consuming; companies spent 26 minutes per employee fixing these errors in the last fiscal year.
The EY report comes on the heels of a Morning Consult survey commissioned by Paycom showing payroll errors cause nearly 1 in 5 American adults to take drastic actions and nearly 60% would have difficulty paying bills and making purchases if just
More information on the EY report can be found here.
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