Employer Changing Payroll Process

[junquemayle]

I am about halfway through my 5-yr plan. I've been doing ok. In fact, I would say that I have been thriving if not for the car expenses that have depleted the emergency fund I managed to save (new transmission - $800; new tires on car 1 $750; new tires on car 2, $600; Brakes $300, $180 2 new batteries) - that's $2500+ right there.

However, I am about to get hit with something entirely unanticipated. Has anyone seen this before?:

I get paid bi-weekly, with my BK payment garnished and automatically sent to the Trustee. The rest of my check is direct-deposited into my checking account. I get paid every other Friday, for the payroll period ending that same Friday. Or at least that's the way it used to work.

The other day, I learned that my company is converging several different payroll systems from sister divisions. Although the payment will continue to be every other Friday (on the same Friday), instead of being paid Friday for the payroll period that ends that same Friday, I will now be paid Friday for the "new" payroll period that ends the *previous* Friday. The practical impact to me is that on an upcoming Friday payday (in August), I will only receive 1 week's pay (instead of 2). Thereafter, the pay will be aligned, and I will receive the normal 2 week's pay. When my employment ends (maybe 2 months from now, maybe 20 years from now), I will receive the "extra" week's pay that they are adjusting now.

To me, this seems like they are taking a 0% interest, indefinite loan from me. The impact will be significant, as the court-ordered garnishment will still be deducted from my 1/2 check, as will (presumably) my other deductions (health insurance, HSA, etc.). This is the equivalent of losing half my paycheck.

In recognition that this may create a hardship for some employees, the company has offered to provide a "transition check" in the offset amount and then deduct 1/6 of the amount "loaned" for the next 6 pay periods, to spread the impact over 12 weeks. That's fine and dandy, but that means a significant shortfall on 6 pay periods, when I've managed to just stay afloat for 2 1/2 years.

I'm thinking about speaking with the Payroll Department, and telling them that a) they are required by federal law to continue to make the court-ordered payment, b) I am required by federal law to turn over any disposable income, and c) I am prohibited by law from assuming debt of greater than $500 without Court permission.

Does anyone have any suggestions?

[ValleYum]

I'm thinking about speaking with the Payroll Department, and telling them that a) they are required by federal law to continue to make the court-ordered payment, b) I am required by federal law to turn over any disposable income, and c) I am prohibited by law from assuming debt of greater than $500 without Court permission.

Does anyone have any suggestions?

Other folks will have more suggestions but I sincerely suggest you do NOT approach your payroll department with the (a), (b) and (c) above. My thought is that they are only obligated to withhold the payment from your EARNED/CALCULATED payroll amount - honestly, it is up to you to earn it said payroll amount and to tough it out if you don't earn enough to withhold the full payment amount from it. Sorry!

Example: You were out sick beyond the amount of paid leave you had available - where would your payroll deduction for your CH13 payment be taken from if you earned no money??? Your company would not be obligated to pay your BK payment just because they have a CH13 withholding order on file for you.

Just my thoughts early on a Tuesday morning here on the West Coast. Good luck.

[TheBajan]

Hi there,

I have to agree with ValleYum that approaching your payroll dept is not a productive idea. They fulfill their obligations to you by paying you what you earn. Whether or not you are required to make payments to your trustee and how those payments are made are completely your responsibility.

As a company, it sounds like they are simply streamlining their payroll process. Most people are paid in the rears by at least a week. In our family, both my husband and I are paid bi-weekly and it's always a week behind. That's normal payroll. Your employer is not held hostage from implementing policy changes simply because you have a ch 13 payroll deduction. It sounds like they are making a good decision for both the company and (long-term) for the employees as well. In addition, they recognize the potential hardship is may cause and they are willing to offer help. That's a good thing.

It sounds like you have about 2 months to face this. You have two options. Obviously, the first option would be to attempt to re-build a bit of savings so that when that week comes that you are short by half, you will have it available. In reality, we are talking about saving one week of pay. If that is not feasible, you have the second option of stretching that pay loss over 12 weeks. In either case, you are going to have to live on slightly less than you earn for several weeks to make things up. It's a bummer... yes. Fun?? No. Fair?? Not necessarily. Life?? Yes. This is why we build emergency savings.

Chin up. It's a bump in the road. You can get through this. It's a piece of cake compared to the $2500 in car repairs.

[Pjmax]

I just want to add, many companies that go through similar transitions 1.) don't give much if any advance warning, and, 2.) don't offer any kind of financial help, like your co. has done, in the changeover. You will have an adjustment period, but 2 months advance notice is really nice. I've gone through this more than once in the past, and it was like 'we're changing next week, sorry.'

[junquemayle]

I understand what everyone has said so far. I work for a large company, and it's better that they give me 2 months notice rather than none. But, it's not just a bump in the road - it is a major detour. And it's not a piece of cake either. In fact, it's equivalent (almost) to the $2500 in car repairs - except the fund is depleted. This is about cash flow, and I will now have to raid my remaining planning/emergency funds - even though there is no emergency. Although I won't go under, I will be running on empty until the end of the year. This gives me no margin for error, and puts me in a dangerous position in case of a real emergency. And of course, there are other unplanned events coming up (like a mandatory out-of-town visit to a dying relative in the next few weeks. How am I going to fund that?? 10-hour drive, at least $250 in gas alone). It's hard enough without having to deal with a missed payroll check. Sure the company can do this, but I won't see the money until I leave there. That will probably be long after the Plan has been completed. And long after I really need the money. I guess I am out of luck.

Hi there,

I have to agree with ValleYum that approaching your payroll dept is not a productive idea. They fulfill their obligations to you by paying you what you earn. Whether or not you are required to make payments to your trustee and how those payments are made are completely your responsibility.

As a company, it sounds like they are simply streamlining their payroll process. Most people are paid in the rears by at least a week. In our family, both my husband and I are paid bi-weekly and it's always a week behind. That's normal payroll. Your employer is not held hostage from implementing policy changes simply because you have a ch 13 payroll deduction. It sounds like they are making a good decision for both the company and (long-term) for the employees as well. In addition, they recognize the potential hardship is may cause and they are willing to offer help. That's a good thing.

It sounds like you have about 2 months to face this. You have two options. Obviously, the first option would be to attempt to re-build a bit of savings so that when that week comes that you are short by half, you will have it available. In reality, we are talking about saving one week of pay. If that is not feasible, you have the second option of stretching that pay loss over 12 weeks. In either case, you are going to have to live on slightly less than you earn for several weeks to make things up. It's a bummer... yes. Fun?? No. Fair?? Not necessarily. Life?? Yes. This is why we build emergency savings.

Chin up. It's a bump in the road. You can get through this. It's a piece of cake compared to the $2500 in car repairs.

[LadyInTheRed]

junquemayle, they are not holding a week's pay until you leave the company. They are paying you a week later than they were before. It sucks, but it is what it is. You can shout about the injustice of the situation, but that won't get you anywhere.

I think your definition of an emergency is a little narrow. Your emergency fund is to handle unexpected cash needs. That's what this is. I know it is nerve wracking when that fund is depleted. But, you will rebuild it again. Start looking for ways to save now. Take that "loan" and get ready to tighten your belt while you pay it off. Don't spend a penny that you don't absolutely have to spend. Dip into the emergency fund only if you absolutely have to. But, if you have to dip into it, know that you built it up once and can build it up again. It won't be easy. But, you can and will get through it.

[LadyInTheRed]

Another thought. I am 3 years into my 5 year plan. When it comes to needing to dip into the emergency fund, when it rains it pours. Right after Christmas, somebody decided to use my parked car as target practice and the bullet went through the back door and out the windsheild. Had to pay a $500 deductible. Two weeks after getting a new back door and windshield, I was driving down the highway and a rock hit the windshield. The crack went from tiny to all the way across the windshield. Another new windshield, another $500. Within the next month, my husband had 2 emergency room visits: $100 copay each, plus $60 in prescriptions. (So glad whe have good insurance and our out-of-pocket expenses aren't higher).

Our emergency fund got uncomfortably low. But, that is what it is there for. We are steadily rebuilding our savings account and crossing our fingers that we don't have another unexpected expenses. This is at least the 3rd time we've been in this position since I filed a due to a cluster of unexpected expenses. We get through it every time. I know it's stressful. But, focus on getting through each day spending as little money as possible instead of focusing on the balance of your savings account.