Best Practices for Payroll – Part 5

As we prepare for an unusual start to the school year, we are striving to make staff feel like valued members of our communities. One element towards that is having routine operations running smoothly so that attention can be focused on the students and their learning experience. Payroll is a predictable element of running a school that, if done well, is hardly thought about by staff – except maybe on pay day! Payroll mistakes, however, can be upsetting, stressful, and take up a lot of administrative time and energy to rectify. This is the fourth in a series with tips on how to process an error-free payroll based on our extensive payroll experiences with schools. We hope these will be helpful in increasing the accuracy of your payroll.

Time Off & Paid Leave

Several policies in your employee / staff handbook will have an impact on the payroll process.  You will want to ensure that you are specific and explicit enough in your handbook that the information can be easily interpreted by both your employees and those processing payroll. A number of questions around paid and unpaid leave should be addressed: 

• Is paid time off (PTO) accrued each pay period?

  1. What happens if an employee needs to take a sick day early in the year?

  2. When is leave without pay allowable?

  3. When and to what extent employees are allowed to maintain negative PTO balances?

  4. When is an employee eligible for short-term disability, FMLA, or both if they need to take an extended leave?

  5. Is an employee required or encouraged to use paid time off when taking FMLA or is out on short-term disability?

  6. What is the impact on benefits if an employee takes extended leave (FMLA or other)?

  7. What is the impact on the employee’s pay for the remainder of the year after returning from leave (e.g., is summer pay accrued during the time on leave)?

Employee Termination

In the event that an employee is terminated, school policies should address the following questions: 

• When and how will an employee receive the final paycheck?

  1. Will you collect certain materials/equipment from the employee at the same time the final paycheck is provided?

  2. How will the employee’s final pay be calculated?

  3. Is unused paid time off paid out or forfeited?

  4. What happens to benefit deductions if termination occurs in the first half of the month?

Fully communicating these policies directly to staff members who are leaving is also suggested so as to avoid any potential disputes or lawsuits.

Previous posts in this series:

Time & Attendance Approval

Payroll Documentation and Communication

Benefits and Deductions Checks

Staff Review of Payroll Data

[This series contributed by Zoe Chen, Senior Finance Analyst; Sarah Guthrie, Senior Finance Analyst; Jenny Huang, Finance Lead; Vika Jordan, Senior Finance Analyst;  and Brian Wolcott, Senior Finance Analyst .]