Direct Deposit Scam

[molson]

Has anyone ever heard of something like this - my (small) employer is instituting direct deposit, which is great. The problem is, they claim that in "order to allow enough time to process payroll so that pachecks will be ready to be depositted" they're going to institute a one-week "pay delay". In other words, my bi-monthly paycheck will only have one-week worth of pay, and the other half will be "delayed" until I leave the company.

I really don't want to make waves, since this is a small company, but is this as crazy at it sounds to me? After taxes, this is like $700 I'm suddenly out in the middle of summer vacation season where I don't have much to spare. And I'm not getting it back until I leave - which will probably be at least another year and a half.

In other words, if I start bitching about this, will I indeed, seem like whining bitch?

[Butter]

That sounds like complete bullshit to me. I can't imagine anyone else is happy about this either.

[evil homer]

my employer (a fortune 500 company) also has this policy. when we were acquired by them (i came from a smaller firm), we had to go through this as well, although it was in the middle of the winter, so it didn't sting as much.

[spleen1015]

This only hurts initially. My company is in the process of going through this transition. They are holding a day's worth of pay for 5 straight checks to get them a week behind.

It sucks, but there's not much you can do about it, so I don't sweat it.

[Eaglesfan27]

My main current employer also does this. I didn't like it when I started, but I chose not to make a stink about it.

[Pumpy Tudors]

This is similar to the company that I work for. Here, it's actually a two-week delay. I received a paycheck dated May 25, but it was for my work done from April 30 to May 12. I won't get paid for May 13-26 until June 8. I've been on the payroll since September, so I don't even notice it now, but it hurt when I first started.

If you have any further questions about how this financially affects your employer's books, I may be able to use Outlook to coerce a young accountant to meet me in the basement for "questioning."

[Swaggs]

Originally Posted by Pumpy Tudors

This is similar to the company that I work for. Here, it's actually a two-week delay. I received a paycheck dated May 25, but it was for my work done from April 30 to May 12. I won't get paid for May 13-26 until June 8. I've been on the payroll since September, so I don't even notice it now, but it hurt when I first started.

If you have any further questions about how this financially affects your employer's books, I may be able to use Outlook to coerce a young accountant to meet me in the basement for "questioning."

Have you still sworn off pics?

[Bee]

Every company I've ever worked for has done this. I always assumed it was pretty much standard practice across the board. When I worked for the government it was actually a two week delay because they only paid monthly at that time. That first month sucked.

[stevew]

For them to hold pay, it's not that uncommon. But to institute it immediately like this, and to not give you any kind of warning so you can budget is bullshit. I remember Target moved from Weekly to biweekly a few years back, and they gave us a heads up on that about 3-4 months ahead of time.

[Butter]

Maybe I'm reading it wrong, but it sounded to me like they were holding a specific week of pay until he left the company just so they could get on track record-keeping wise. Not that they were shifting pay periods, but that they were deliberately holding a week until much later. Like I said, maybe I read it wrong.

[molson]

Originally Posted by Bee

Every company I've ever worked for has done this. I always assumed it was pretty much standard practice across the board. When I worked for the government it was actually a two week delay because they only paid monthly at that time. That first month sucked.

But I wonder if it's standard practice to "delay" the payment indefinitely, until one leaves the company. I'd have zero problem with this If I got the money within a month or two. But to delay it for 1-3 years (or more) seems ridiculous. This is money that's not going to my student loans, etc, and I'm sure they won't pay interest on it whenever I get it back. And I'm anticipating a headache when I try to get it back when I do leave.

[stevew]

I think they are just shifting pay periods instead of holding pay. That's what it sounds like to me.

[st.cronin]

Originally Posted by stevew

I think they are just shifting pay periods instead of holding pay. That's what it sounds like to me.

I'm not sure that for molson there is any practical difference.

[stevew]

true, I guess if you kind of need the money, maybe you can borrow 700 from your IRA and pay it back over the next year(or sooner if you have extra money a couple months). That small amount per check wouldn't really be noticeable.

[Bee]

I agree with both stevew and st. cronin, it sounds like they are shifting the pay period to allow for extra processing time, but for all practical purposes it amounts to the same thing (you lose a week's pay now and the company will owe you a week's pay when you leave).

Edit: BTW, I've never had problems collecting what was owed when I left but sometimes it takes an extra 2 -4 weeks to get that paycheck.

[Pumpy Tudors]

Originally Posted by Swaggs

Have you still sworn off pics?

Pics of me? Not at all. There might be a picture of me posted at any time.

Pics of the accountant? I don't think I'm allowed to post pics of that nature on FOFC. There's a sticky thread about that or something.

[Telle]

I work for the State of New York, and we have a two week lag. It really sucks when you're just starting, because it means you have a full month before you get a paycheck.

[gstelmack]

I have NEVER (including current employer) had anyone do something like this. I work, I get my pay. In this day of technology, insta-processing, and direct depositing, how on earth does anyone justify waiting even a single day to give you the money you've earned? It's bad enough the banks claim it takes a week to clear a check still...

[DanGarion]

I've dealt the the shifting of pay periods, it sucks, but then you get over it.

[molson]

Originally Posted by stevew

For them to hold pay, it's not that uncommon. But to institute it immediately like this, and to not give you any kind of warning so you can budget is bullshit. I remember Target moved from Weekly to biweekly a few years back, and they gave us a heads up on that about 3-4 months ahead of time.

Well, they did give me a few months heads up, but unless my rent or student loan payments somehow decrease over those months, then it's still going to be a hardship.

I guess I'll just bite the bullet and take it like a man. Though I agree with gstelmack, this seems so 1950s or something - how can't there be a solution?

[digamma]

Originally Posted by gstelmack

I have NEVER (including current employer) had anyone do something like this. I work, I get my pay. In this day of technology, insta-processing, and direct depositing, how on earth does anyone justify waiting even a single day to give you the money you've earned? It's bad enough the banks claim it takes a week to clear a check still...

I've never had a job that doesn't pay on some delayed cycle. Payroll has to be processed, hours or vacation counted, etc.

I think the issue here is the fact that there is a transition period, and one week of pay is being deferred. Question I have is whether direct deposit is optional, and if you do not select it, whether your pay continues uninterrupted. If you're selecting the direct deposit option and have been informed of the one week deferral, then it sucks for the short term, but you probably just have to grin and bear it.

[SackAttack]

digamma, opting out of direct deposit would probably not impact your pay schedule. That's going to change on a company-wide basis, and the only question is whether you get your money dumped direct into your bank account, or keep getting a paper check.

[SackAttack]

dola,

oops, the way I read your post, I thought *you* were the one having the issue. Heh.

[stevew]

Do you actually get paid for vacation time(as in each day you have can be redeemed for x$), or does it merely replace hours you should be scheduled to work? If that was the case, maybe you could take a few paid vacation days on that first check, which would help you get through that period as well.

[wade moore]

Originally Posted by stevew

Do you actually get paid for vacation time(as in each day you have can be redeemed for x$), or does it merely replace hours you should be scheduled to work? If that was the case, maybe you could take a few paid vacation days on that first check, which would help you get through that period as well.

This is a foreign concept to me, do places actually do this?

[Pumpy Tudors]

Originally Posted by wade moore

This is a foreign concept to me, do places actually do this?

Yep, places do this. They don't do it at my current company, but my employer in New Orleans did. When I left the job to move to Pennsylvania, I still had two vacation days left. Rather than quit the job two days early, I stayed through the end of the pay period and had them tack on my remaining 16 hours of vacation time onto my last check.

[wade moore]

Originally Posted by Pumpy Tudors

Yep, places do this. They don't do it at my current company, but my employer in New Orleans did. When I left the job to move to Pennsylvania, I still had two vacation days left. Rather than quit the job two days early, I stayed through the end of the pay period and had them tack on my remaining 16 hours of vacation time onto my last check.

Well, that's different to me.. that's paying out your leftover vacation time..

[dacman]

It's a little unusual to go through a pay period shift while on the job, but there's no scam involved. Most people have to deal with this when they first start working. I've had to work for 5 weeks before receiving a full 2-week check (1st check was for 1 week).

[cthomer5000]

Originally Posted by wade moore

Well, that's different to me.. that's paying out your leftover vacation time..

yeah. That to me is totally standard. Just being able to convert your vacation days into cash? I've never heard of that.

[cthomer5000]

Originally Posted by dacman

It's a little unusual to go through a pay period shift while on the job, but there's no scam involved. Most people have to deal with this when they first start working. I've had to work for 5 weeks before receiving a full 2-week check (1st check was for 1 week).

Exactly. Im actually amazed that so many people in this thread have apparently never been payed on any sort of delay.

[Pumpy Tudors]

Originally Posted by wade moore

Well, that's different to me.. that's paying out your leftover vacation time..

I know it's not universal, but I figure that it's pretty common. Some people had two weeks of vacation (many of us only had one week) per year, but they didn't care to use the whole two weeks. They'd use just won week and then "cash out" the other week. It was pretty standard at our company for people to cash out a vacation day or two around the holidays so that they'd have extra money.

I admit that that was one of the things I liked about working at that job. If you didn't want to use vacation days, it was basically like a bonus 40 or 80 hours (depending on your status). Of course, this is a company that didn't pay for sick days or personal days, and it was fairly common to work holidays, also (the only holidays I never worked were Easter and Christmas). Ups and downs.

But I digest. Yeah, some companies will pay for vacation time that doesn't get used.

[Logan]

Originally Posted by cthomer5000

yeah. That to me is totally standard. Just being able to convert your vacation days into cash? I've never heard of that.

As Pumpy began saying, it gives some extra incentive for people to not take vacation time, which cuts into productivity, while still maintaining the benefit to the employee (being paid for work not performed).

edit: Also, back when I was in business school I remember doing a case study on a company (can't remember the name but I think it was in the telecom industry) who not only allowed their employees to cash out unused vacation time, but to encourage coming into work everyday, they were able to cash out each day for something like 1.5 days worth of pay.

[stevew]

Yeah, most of the places I have worked just cut you a check on your yearly anniversary for accrued vacation time. You just take unpaid vacations throughout the year if you want to go somewhere for a week, or save your money for the check you'll be missing.

[SackAttack]

Originally Posted by cthomer5000

Exactly. Im actually amazed that so many people in this thread have apparently never been payed on any sort of delay.

Starting a job where there's a pay delay isn't that big a deal.

The issue for me would be just "Hey, we're switching over, here we go!"

GameSpy did that to me a number of years ago. They decided that the pay period we had just had two weeks previously was going to get 'repeated' for the purposes of switching to their new system. No repeat in actual pay, of course. Just another two weeks with no pay until the new, delayed, system was implemented.

Let me tell you, trying to stretch two weeks' pay to cover a month doesn't work all that well when you haven't moved out yet. I can't imagine what it would have been like had I been out on my own.

[terpkristin]

Originally Posted by molson

they're going to institute a one-week "pay delay". In other words, my bi-monthly paycheck will only have one-week worth of pay, and the other half will be "delayed" until I leave the company.

This is the only part that sounds odd to me.
Why would they hold it that long?

When I was in high school, I was an intern in the accounting department of a small company, and their practice was similar to the following:
June 1 (Friday): pay period ends
June 5 (Tuesday): timesheets due to accounting with all signatures
June 6 - 11th: processing by accounting/payroll
June 15: payday for the period that ended June 1.

The place where I currently work is a bit different. Time periods are from Monday (say May 28) through Sunday (in this case, June 10). Timesheets are due signed completely by 1 p.m. on June 11th (Monday). We get paid on the 15th.

The real differences in the companies? The company I worked at in high school was small (~300 ish employees) and most of the employees worked offsite. The timesheets were done via the paper/pen method. The company I work for now is much larger (I really don't know how many though), most of the employees work either at Goddard Space Flight Center, the campus in Dulles, VA, or the campus in Chandler, AZ. Timesheets are done electronically.

As I said, if they're shifting the pay cycle, that's one thing, but it seems odd that they're holding half of your check until you part ways with the company..

/tk

[cthomer5000]

Originally Posted by terpkristin

As I said, if they're shifting the pay cycle, that's one thing, but it seems odd that they're holding half of your check until you part ways with the company..

I guess this is ONE way you could look at it, but that's ridiculous. What's really happening is that they are always withholding the most recent week you worked... not 1 random week in the middle of 2007.

[terpkristin]

Originally Posted by cthomer5000

I guess this is ONE way you could look at it, but that's ridiculous. What's really happening is that they are always withholding the most recent week you worked... not 1 random week in the middle of 2007.

I think you and I agree on this, that withholding the week is crazy/fishy/odd.

I had two separate thoughts there, probably didn't define them well:
1. If they're pushing off paying for a week or something, that alone is one thing, if they're doing it to shift the pay cycle.
2. The withholding until parting with the company is odd. Regardless of what they're doing with the pay cycle.

/tk

[Pumpy Tudors]

Somebody can correct me if I'm wrong, but I don't see where it's specifically that they're withholding the money until he leaves the company. It's just that the pay is a week behind, so as long as he's still working there, his pay is a week off. Once he leaves the company, then that week will "catch up" to him, so to speak, and he'll get paid for it.

[cthomer5000]

Originally Posted by terpkristin

I think you and I agree on this, that withholding the week is crazy/fishy/odd.

No, I'm not saying this in any way. It's totally standard.

[SackAttack]

Originally Posted by terpkristin

I think you and I agree on this, that withholding the week is crazy/fishy/odd.

I had two separate thoughts there, probably didn't define them well:
1. If they're pushing off paying for a week or something, that alone is one thing, if they're doing it to shift the pay cycle.
2. The withholding until parting with the company is odd. Regardless of what they're doing with the pay cycle.

/tk

Not really. Think of it like this. Because of the shifting, where your pay is always a week behind your actual hours worked, you won't ever catch up to the pay you're owed until you're no longer accruing hours working at the company.

It's not that they're doing anything devious by holding it. It's just that, because of the nature of the cycle, you're always adding more hours worked. It's like a credit card treadmill, only in reverse. Instead of never catching up to what you owe, you'll never catch up to what you're owed until you're ready to leave the company, at which point they only have one week's worth of hours to square away.

[terpkristin]

Originally Posted by SackAttack

Not really. Think of it like this. Because of the shifting, where your pay is always a week behind your actual hours worked, you won't ever catch up to the pay you're owed until you're no longer accruing hours working at the company.

It's not that they're doing anything devious by holding it. It's just that, because of the nature of the cycle, you're always adding more hours worked. It's like a credit card treadmill, only in reverse. Instead of never catching up to what you owe, you'll never catch up to what you're owed until you're ready to leave the company, at which point they only have one week's worth of hours to square away.

Never thought of it like this, in the old job I had, always figured I'd end at the end of a pay period and what I got on my last paycheck I received was all I was owed for all time worked. But my old job paid you 2 weeks after the period closed, I guess the 2 weeks vs. 1 week is what I find odd, but hey, it is what it is.

I dunno, my brain is fried right now, too much work.

/tk

[JeeberD]

Getting paid daily is kinda cool...

[wade moore]

Originally Posted by Pumpy Tudors

I know it's not universal, but I figure that it's pretty common. Some people had two weeks of vacation (many of us only had one week) per year, but they didn't care to use the whole two weeks. They'd use just won week and then "cash out" the other week. It was pretty standard at our company for people to cash out a vacation day or two around the holidays so that they'd have extra money.

I admit that that was one of the things I liked about working at that job. If you didn't want to use vacation days, it was basically like a bonus 40 or 80 hours (depending on your status). Of course, this is a company that didn't pay for sick days or personal days, and it was fairly common to work holidays, also (the only holidays I never worked were Easter and Christmas). Ups and downs.

But I digest. Yeah, some companies will pay for vacation time that doesn't get used.

I definitely see the logic behind it, but didn't know companies did it.. the most i've heard is your vacation being cashed out when you leave at the end of the year..

At any rate, interesting to know some companies do this - you learn something new every day, right?

[sterlingice]

It always scares me that 30-40% of the US lives paycheck to paycheck. I'll keep my debt over stressing over whether I can keep my power on from one day to the next...

SI

[ShaqFu]

I have only had this happen once and it wasn't a big deal. They simply added the extra week to the new pay cycle, as one-time adjustment. If you were pressed for the cash, they allowed a one-time payroll advance, which simply meant your one-time adjustment would be deducted.

Direct deposit can be problematic in weekly and every other week situations, since these are processed in advance. Many companies on a monthly cycle, such as mine, will begin payroll mid-month, begin processing things around the 22nd or 23rd, sending them to the ACH system on the 29th or 30th for deposit on the first/last day of the month.

[Edward64]

Molson. I have alot of HR/Payroll/Benefits systems experience. It is very common for companies to have a 1 or 2 week drag (regardless of direct deposit), especially for hourly (vs salaried) employees.

In a pay cycle, you would have a (1) pay begin date (2) pay end date and (3) paycheck date.

Ex. Pay Begin Date = Sun 5/13
Pay End Date = Sat 5/26
Pay Check Date = Fri 6/1

If you were an hourly employee, your time would not get reported until sometime after Sat 5/26. So it makes sense for your Pay Check date to be (typically) a week after.

For salaried employees, I have seen both. Either the salaried folks also had a drag consistent with the hourly employees or no drag at all.

You will get it back at the end of your employment. I never really thought about it but I guess if you plan to stay forever until you retire, it could be considered a 'loss'. However, most would probably consider their current job non-permanent and they will get this 1 week back at the end of their employment.

I just did an implementation where a company owned many smaller companies and was running payrolls 3-4 times a week over a 2 week period! We consolidated this into 1 big payroll over a 2 week period. This resulted in some unhappy employees as some were adversely impacted by our standardized drag. Many employees lived paycheck to paycheck and we did implement this consolidation over a 2-3 month period to minimize the impact.

Bottom line. This is legit unless you have concerns that the company is in financial trouble and trying to save 1 week of payroll in the short term.

Pumpy Tudors & Wade Moore. Many companies incorporate a max vacation days (ex. 10 days) and any that is accrued past this max is a use it or lose it. Many other companies let you sell some of your vacation back once a year (normally 5 days ... most progressive companies do really want you to use your vacation for your well being).