What To Ask HR When You Spot About Pay Irregularities

Having employees who feel unappreciated and underpaid can be detrimental to staff retention and productivity. Although there are many reasons why workers may feel demotivated at work, pay irregularities are partly to blame.

However, before seeking greener pastures and switching jobs, an employee must discuss various salary issues with the human resources department. Whether you think you’re underpaid, have unlawful pay deductions, or have your overtime work unaccounted for, here’s what you need to know.

How do you define worker’s pay? 

Worker’s pay is financial compensation paid for by an employer to an employee. Also known as a salary, this remuneration is due to the staff at least once a month.

Salaried employees, or individuals working full-time in an organization, often receive a fixed income per month. Depending on the state-mandated benefits, this regular income may include paid leaves and holidays, overtime payments, health benefits, and other types of insurance coverage. 

Also read: What Are the Main Differences Between Salary and Hourly Paystubs?

How are pay rates determined?

Several factors need to be considered in determining an employee’s salary. To determine how much an employee receives as a salary, employers will have to research the job and salary market and analyze the job and its requirements.

Employers will have to compare how much others are earning for the same position, in the same field, and jurisdiction. Additionally, organizations can create a salary range for every job position or category. As individuals get promoted, perform well, or stay on the job for several years, their salaries will increase as well.

In some countries, supply and demand influence pay scales, where fixed earnings for employees spike if there aren’t enough qualified persons for the position. Country and state legislations also affect pay rates, where specific regulations set minimum pay rates, overtime rates, and other unique benefits.

Employers are legally mandated to follow minimum wage rates set in a specific jurisdiction. For instance, if the minimum rate is at USD$12, a 40-hour workweek should provide a team member with at least USD$1,920 in gross monthly salary.

While an acceptable practice in the past, employers are now discouraged from using an applicant’s former pay rate as a baseline for a salary offer. Some states and localities in the United States have regulations restricting organizations from asking about a prospect’s wage history. California has strict rules that ban this practice, even if the applicant provides the data voluntarily. On the other hand, employers must supply a candidate with pay scale information.

What is a pay statement?

A wage statement or pay stub is often attached to an employee’s paycheck. But because states have varying requirements in providing employee access to their pay stubs, some organizations send electronic copies instead of physical pay stubs. Organizations that outsource payroll services can also provide site access to their workers to check their statements online.

In the same vein, state regulations also vary as to the information required in the pay statement. For instance, some areas allow pay statements to include the gross or total wage, the deductions, tax withheld, and the net or take-home pay.

Pay stubs are often required from employees who need to show proof of income, for example, when applying for a loan or renting out a property.

Also read: A Full Guide on How to Calculate Income Tax On A Pay Check

What types of information are often included in a pay stub?

A salary statement generally includes information about the employer and employee. Often, these include the following:

• Employer’s name and address

• Worker’s full name

• Postal address 

• Social Security number 

• Date of birth 

• Gross salary

• Regular pay rate 

• Hours worked or rendered 

• Additional earnings such as overtime, bonus, and commission, as applicable

• Mandatory deductions such as income tax

• Other types of deductions, including insurance premiums or retirement contributions

• Loan repayments, as applicable 

• Union dues

• Leave balance

A pay stub should provide an employee with a proper understanding of how their take-home pay or net wages were calculated. A pay stub can help spot pay irregularities and correct them right away if supplied to each worker.

Unfortunately, there’s no provision under the Federal Law Standards Act (FLSA) that automatically requires organizations to supply pay statements to their employees. However, organizations are mandated to keep records of the hours worked and wages paid for their workers. 

What are pay irregularities?

Pay irregularities include discrepancies in salary calculations, affecting your take-home or net pay. It’s not uncommon, as salary computation can be complicated, considering the various deductions and additions. Human error, particularly in typing in the correct input, is the most common reason for inconsistencies. 

When a payroll specialist inputs incorrect data regarding your overtime hours or inadvertently enters the wrong figures for your regular pay rate and commissions, it may drastically impact your expected salary amount. Additionally, there might have been new tax deductions rates, loan repayment interest rates, and a hike in premium payments that you’re not aware of, resulting in a lower net salary.

What to do in case of pay irregularities

After receiving your pay statement, look at the details to check whether you’ve received the amount reflected on the pay slip. Additionally, make sure you’re not underpaid or overpaid. Don’t hesitate to perform the following actions for any salary discrepancies:

• Inform your supervisor as soon as possible: If you discover any payroll mistake, notify your supervisor to help you forward the concern to the human resources unit.

• Review your records: Ideally, you should keep a separate record of your working and overtime hours. Check whether your records and your employer’s match. Having your record is vital so you categorically know how much your employer should pay you in that period.

• Ask your colleagues: While employees must avoid discussing specific salary details, you can ask your colleagues if they have similar issues. A widespread payroll irregularity will catch your company’s attention faster. 

• Schedule a meeting with the HR department: Before approaching your human resources department, it’s better to have a copy of your pay statement for the proper reference. Take note that not all employers are obliged to provide their workers with a wage statement. If you’re working in any of the nine localities called the “no-pay stub requirement states”—or in areas where pay stubs aren’t required—you can still ask your company to provide you with either a printed or electronic statement.

Questions to ask HR about pay irregularities

After preparing the pertinent documents, make sure you keep your emotions in check before going to the HR department. Consider asking the following key questions:

1. How much do I earn per hour? 

Workers have various minimum wage rates, depending on whether they work for a federal, state, or private organization. Federal workers, for instance, should receive no less than USD$7.25 per hour. This rate has been in effect since 2009. If federal and state laws apply to certain employees, they must receive the higher minimum wage rate. 

As mentioned, the lowest acceptable wage rates vary from state to state. The District of Columbia has the highest minimum wage set at USD$15 per hour. Washington comes in second with USD$13.5, also on an hourly basis. On the opposite side of the spectrum are Georgia and Wyoming, which register USD$5.15. Jobs that earn the lowest pay are often in the food and retail sectors. 

If you’re a minimum-wage earner, check your hourly pay rate and ensure it doesn’t fall below the state-mandated amount.

2. What are the deductions to my salary?

Ask your HR representative to explain your pay deductions. Often, these amounts come in codes on your pay slip. For reference, employers are legally authorized to take off a certain amount to repay debts owed to the employer, third parties, and the government. Federal income tax, Social Security, and Medicare, as well as state and local taxes, may also be subtracted from your gross salary. In some cases, companies may also deduct union dues, insurance premiums, and retirement contributions with the employee’s consent. 

Employers are not allowed to ask their workers to pay for their work tools, uniforms, or financial discrepancies because of customer non-payment or theft.  

3. How is my overtime computed?

Take note of your overtime pay too. Most labor laws, including the FLSA, stipulates that an employee must earn 1.5 times for every extra work done past the standard working period. For instance, if you’re asked to work longer hours to cover for a colleague who’s had an emergency and if you earn USD$15 per hour, you’re entitled to USD$22.50 for every hour you rendered past your eight-hour workday.

4. How do you record the hours worked by each employee?

As workers are paid on an hourly basis, accurate time tracking is crucial in all organizations. Unfortunately, not all employers have time-keeping software to record working and overtime hours efficiently. In the same vein, manual time-recording can pose problems, especially when the written entries are hard to decipher or when the boss erratically records the entries.

5. Am I classified correctly as an employee?

Check your pay statement to see whether you’re receiving state-mandated benefits and other pay additions. Most employees qualify for overtime pay, leave credits, and other similar perks that independent contractors don’t enjoy.

Mistakes can happen, leading human resources to categorize full-time employees as independent contractors inadvertently. If left unchecked, wrong employee classification can lead to wage underpayment, a potential lawsuit, and penalties.

Wrap Up

The workforce serves as the lifeblood of all economies; that’s why federal and state laws protect workers from unfair labor practices. Despite advancements in handling salary payments, systems are not entirely free of errors. In case of pay discrepancies, employees shouldn’t hesitate to request an amendment to receive the amount owed to them by the organization.

If these concerns remain unaddressed, it’s best to file a complaint with the state labor agency or consult with a lawyer for a potential lawsuit.