Payroll
Common Payroll Errors FAQ
This FAQ answers 20 of the most common questions about payroll errors. Organized across six topics, from what payroll errors are and why they happen through year-end mistakes and prevention systems, these answers give HR, Payroll, and Operations leaders clear guidance for catching recurring mistakes before they reach employee paychecks.
· Published May 21, 2026
20 questions
- What is a payroll error?
- A payroll error is any mistake that causes an employee to be paid incorrectly, whether overpaid, underpaid, or taxed at the wrong rate. Payroll errors range from simple data-entry typos to systemic failures in how hours, rates, or deductions are calculated. The IRS holds employers responsible for correcting errors and can impose penalties for late or inaccurate tax filings tied to payroll mistakes. For a deeper look at the term, see payroll error glossary entry.
- Are payroll errors common?
- Yes. Payroll errors are widespread, especially in organizations that rely on manual timesheets or fragmented data entry. Inaccurate time records alone can cost employers 2 to 5 percent of gross payroll, and manual timesheet errors can add up to $2,300 per employee annually. Even companies using payroll software encounter errors when the time data feeding those systems is incomplete or unvalidated.