Direct deposits delayed-Federal Reserve closed for holiday

GJohnson

The majority of our staff have direct deposit for their paychecks. Our payroll cutoff was on the 10th. We submitted payroll to our service on the 11th. With Monday the 14th being a holiday, the payroll service could not transmit the payroll file until Tuesday, the 15th, and our pay day, as the Federal Reserve was closed on Monday for Columbus Day.

Some of our employees had set up items to be paid directly from their accounts on the 15th - anticipating that their direct deposits would be in their accounts on our posted distribution dates. As the funds were delayed, they are saying that they have now been penalized with NSF fees and are seeking relief from us. (Some of the staff had their direct deposits in their accounts late on the 15th; some did not arrive until the morning of the 16th).

I have talked to our payroll service who states that they do not have a responsibility as they do no guarantee payroll to be in the accounts in less than 72 hours from the processing time.

Has anyone else experienced this problem? Are there any legal issues to be considered?

HRGirl

In the event that the bank has a holiday on the day our payroll is to be processed, we adjust the processing so that the employees paychecks will be there on the appropriate day. We normally process payroll on Wednesdays for a Friday pay day. Christmas falls on Wednesday this year, we will process payroll on Monday or Tuesday to assure our employees will be paid on Friday. Our payroll company makes us aware of any holidays that will effect our payroll. Doesn't yours?

moneyman

Our payroll company advises us that WE are responsible to watching out for the bank closures and that they guarantee the direct deposits if the payroll is processed 2 days in advance. In the event that a bank holiday fall within our payroll processing period, WE must schedule to submit our payroll a day early. We generally submit payroll on Wed for a Fri pay date. If a bank closure is on Wed/Thu/Fri of the pay period, we must submit the payroll on Tuesday to guarantee that payments will be made on time. We always pay BEFORE a holiday instead of after. We will always claim responsibility and make any reparations needed if we do not follow the guidelines.

Under your circumstances, I would advise bucking up the money to the employees, and issuing letters to whomever needs it to explain that it was not the employee's fault. I have seen that done especially with utility companies that either take away the deposit or require money orders. A letter of explanation may help the employee remove any "black mark" from their payment records due to the company's mix up.

GJohnson

We generally do adjust for holidays. I guess we missed this one since we did not observe it as a holiday. Also, most of the banks in town were open on the holiday. We did not receive any "heads up" from our service.

We have agreed to pay the fees for the employees involved.