When was the last time you reviewed your paystub line by line? Many employees only check net pay, but payroll errors are common and often missed. The American Payroll Association has estimated that payroll errors affect roughly 1–8% of total payroll. Without regular review, small errors can continue for months and add up.
Whether you run payroll, oversee HR compliance, or want to protect your own earnings, knowing the most common paystub errors helps you catch problems early. Paystub mistakes can change take-home pay, tax withholding, benefit coverage, retirement contributions, and payroll totals used in workers’ compensation audits and premium calculations. This guide covers seven high-impact mistakes and how to spot and fix them.
Why Your Paystub Accuracy Matters More Than You Think
A paystub (also called a wage statement or earnings statement) shows pay, hours, and deductions for a specific pay period. It is used to verify income, document tax withholding, and support benefits and leave tracking. In many states, employers must provide wage statements with specific required details.
For employees, an accurate salary slip affects:
- Loan and mortgage applications
- Rental agreements and housing applications
- Tax filings and potential refunds
- Workers’ compensation claims and benefits calculations
- Unemployment benefit eligibility
- Social Security benefit calculations
For employers, maintaining accurate payroll stub records is equally critical:
- Compliance with federal and state labor laws
- Accurate workers’ compensation premium calculations
- Protection against wage and hour lawsuits
- Proper tax withholding and reporting
- Employee trust and retention
Now, let’s examine the seven most common mistakes that appear on income statements and learn how to catch them before they cost you money.
Mistake #1: Incorrect Hourly Rate or Salary Calculations on Your Paystub
An incorrect base pay rate is a high-impact paystub error because it affects every paycheck. Common causes include an incorrect rate entry, a raise not being updated, or an incorrect salary-to-hourly conversion. Even a small gap can compound over time.
How This Mistake Happens
Pay statement errors related to base compensation typically stem from:
- Data entry errors when setting up new employees
- Failure to update systems after approved raises or promotions
- Incorrect conversion of annual salary to hourly equivalents
- Miscommunication between HR and payroll departments
- Software glitches during system updates or migrations
Real-World Impact
Example: If an employee should earn $25/hour but payroll lists $24/hour, the shortfall is $1 per hour. At 40 hours per week, that is $40 per week, about $160 per month, and roughly $2,080 per year. If the error continues, the total loss grows each pay period.
How to Catch and Correct It
Compare the pay rate on your paystub to your offer letter, employment agreement, and any written raise or promotion notices. Keep copies of compensation documents and verify the rate each pay period. If the rate is wrong, notify payroll or HR promptly and include the effective date and supporting documentation.
Mistake #2: Overtime Pay Miscalculations
Overtime errors are common and can be expensive. Under the Fair Labor Standards Act (FLSA), non-exempt employees must generally be paid 1.5 times their regular rate for hours worked over 40 in a workweek. State overtime rules can add additional requirements.
Common Overtime Errors
Your compensation record may contain overtime mistakes such as:
- Calculating overtime at the straight-time rate instead of time-and-a-half
- Incorrectly classifying employees as exempt from overtime
- Failing to include bonuses, commissions, or shift differentials in the overtime rate calculation
- Not counting all hours worked, including off-the-clock work
- Averaging hours across multiple workweeks instead of calculating weekly
The Financial Impact
Overtime underpayment adds up fast. Example: At $20/hour, 10 overtime hours should be paid at $30/hour. Straight time would pay $200; correct overtime would pay $300, a $100 difference per week. Over a year, that is about $5,200 in unpaid overtime, not counting state-law differences or potential penalties.
Verification Steps
Confirm overtime hours are listed separately from regular hours and that the overtime rate equals 1.5 times the regular rate unless a different state rule applies. If you receive non-discretionary bonuses, commissions, or shift differentials, confirm whether they were included in the regular-rate calculation used for overtime.
Mistake #3: Incorrect Tax Withholdings on Your Paycheck Statement
Tax withholding errors can reduce take-home pay or create a tax bill later. Your paystub should reflect your current federal and state withholding elections and any pre-tax deductions that reduce taxable wages.
Types of Withholding Errors
Your earnings slip may contain these tax-related mistakes:
- Incorrect filing status (single vs. married, for example)
- Wrong number of allowances or dependents
- Failure to update withholdings after major life changes
- Incorrect state tax calculations, especially for remote workers
- Missing or incorrect local tax withholdings
- Errors in pre-tax deduction calculations affecting taxable income
Why This Matters
Incorrect withholding can cause underpayment and penalties or consistent over-withholding that reduces cash flow. Your paystub should match your current W-4 elections and applicable state forms. If your work location or residence changed, state and local withholding often needs to be updated.
How to Verify Tax Accuracy
Compare your paystub’s withholding details to your most recent W-4 and state withholding forms. If your income or household situation changed, use the IRS Tax Withholding Estimator to check whether withholding is likely to match your expected tax liability. If changes are needed, submit updated forms and confirm the update on the next paystub.
Mistake #4: Benefit Deduction Errors on Your Paystub
Benefit deductions can be large and easy to overlook, especially when multiple plans are involved. Errors can cause overpayment, missed coverage, or missing retirement contributions.
Common Benefit Deduction Mistakes
Your earnings voucher may show errors related to:
- Health insurance premiums that don’t match your selected plan
- Retirement contribution percentages that differ from your elections
- FSA or HSA deductions that are incorrect or missing
- Life insurance or disability insurance premium errors
- Continuing deductions for benefits you’ve cancelled
- Missing employer matching contributions
The Hidden Costs
Benefit deduction errors can create immediate and long-term costs. Over-withholding reduces take-home pay, and under-withholding can trigger catch-up deductions or coverage issues. Retirement errors can reduce total contributions and may also reduce employer match and long-term investment growth.
Verification Process
Match each deduction to your benefit elections and plan confirmations, especially after open enrollment or a qualifying life event. For retirement plans, confirm employee contributions and employer match are deposited as expected. If a deduction is wrong, contact HR or the benefits administrator and request the correction timeline and effective date.
Mistake #5: Paid Time Off (PTO) and Leave Tracking Errors
Many paystubs include PTO balances and accruals. Errors can reduce accrued time, misstate available leave, or affect pay when leave is taken.
How PTO Errors Occur
Your wage document may contain PTO mistakes such as:
- Incorrect accrual rates based on tenure or position
- Failure to credit carryover balances from the previous year
- Improper deductions for time taken
- Missing sick leave or personal day credits
- Errors in holiday pay calculations
- Incorrect tracking of FMLA or other protected leave
Financial and Professional Impact
PTO has measurable dollar value. Example: At $60,000 per year, a daily rate is roughly $230 (assuming 260 workdays). If an incorrect balance causes you to lose accrued PTO, you lose paid time off and its cash value. Errors involving protected leave can also create compliance issues and affect how pay is handled during leave.
Keeping Accurate Records
Track PTO requests, approvals, and time taken in your own records and reconcile them to the balance shown on your paystub. If your company uses a separate timekeeping system, compare balances across systems and report discrepancies quickly. PTO corrections are typically easier when reported soon after the affected pay period.
Mistake #6: Misclassification of Employment Status on Your Paystub
Misclassification affects pay rules, tax withholding, and benefit eligibility. It can also affect overtime eligibility, unemployment coverage, and workers’ compensation coverage.
Types of Misclassification
This critical error manifests in several ways:
- Classifying employees as independent contractors
- Incorrectly designating workers as exempt from overtime
- Misclassifying full-time employees as part-time
- Incorrect job classification affecting pay scales
The Serious Consequences
If you are misclassified as an independent contractor, you may not have payroll tax withholding, employer-paid benefits, unemployment coverage, or workers’ compensation coverage, and you may owe self-employment taxes. If you are misclassified as exempt, you may be owed unpaid overtime. For employers, misclassification can trigger back taxes, penalties, back wages, benefit liability, and workers’ compensation premium adjustments.
For employers, misclassification can result in:
- Back taxes, penalties, and interest
- Back wages and overtime payments
- Employee benefit costs and contributions
- Workers’ compensation premium adjustments and penalties
- Potential criminal charges in egregious cases
Identifying Misclassification
Classification depends on factors such as control over the work, schedule, tools, and independence, not just job titles or labels. If the company controls your schedule, directs how the work is performed, provides tools or equipment, and restricts outside work, you may be an employee even if you are paid as a contractor. Review IRS and state guidance on worker classification and consider professional advice if you believe your status is incorrect.
Mistake #7: Year-to-Date (YTD) Calculation Errors on Your Paystub
Year-to-date totals show cumulative earnings and deductions for the year. YTD errors can affect tax filings, contribution limits, benefit thresholds, and the accuracy of year-end forms such as the W-2.
Why YTD Errors Are Particularly Problematic
Your year-to-date figures impact:
- Social Security and Medicare tax caps
- Benefit eligibility thresholds
- 401(k) contribution limits
- Tax bracket calculations
- Workers’ compensation premium audits
- W-2 accuracy at year-end
Common Causes of YTD Discrepancies
These errors often occur due to:
- System resets that don’t carry forward properly
- Manual adjustments that aren’t reflected in YTD totals
- Payroll system migrations or updates
- Corrections to previous pay periods that aren’t retroactively applied
Verification Strategy
Periodically add up paystubs across the year and compare the sum to the current YTD totals. This is especially important late in the year before W-2 forms are issued. If YTD totals are wrong, request corrections before year-end so tax reporting is accurate.
How to Review Your Paystub Effectively: A Step-by-Step Process
Now that you understand the common mistakes, here’s a systematic approach to reviewing your paycheck statement each pay period:
Step 1: Verify Basic Information
Confirm your name, address, Social Security number, and employee ID are correct. Incorrect personal information can delay corrections and affect tax and benefits records.
Step 2: Check Pay Period and Hours
Verify pay period dates and total hours worked against your time records. Confirm regular and overtime hours are listed separately and categorized correctly.
Step 3: Confirm Pay Rates
Confirm your hourly rate or salary matches your employment agreement and that raises are reflected with the correct effective date.
Step 4: Review Gross Pay
Confirm gross pay matches hours worked multiplied by pay rate. For salaried employees, confirm the pay-period amount aligns with the annual salary and pay schedule.
Step 5: Examine Deductions
Review each deduction line item—taxes, benefits, retirement contributions, garnishments—against your elections and prior paystubs.
Step 6: Verify Net Pay
Confirm net pay equals gross pay minus all deductions.
Step 7: Check YTD Totals
Confirm year-to-date totals match cumulative earnings and deductions from earlier pay periods.
What to Do When You Find a Paystub Error
When you find a paystub error, act quickly and keep records. Use these steps to resolve the issue:
Document Everything
Gather supporting documents such as your offer letter, raise notices, benefit elections, time records, and prior paystubs.
Report Promptly
Contact payroll or HR as soon as you find the issue and ask how corrections and retroactive adjustments are handled.
Follow Up in Writing
Send a written summary with the pay period, line items affected, and amounts involved, and keep copies of all correspondence.
Know Your Rights
Review federal and state wage laws on wage statements and pay corrections. If an employer does not correct legitimate errors, state labor agencies may offer a complaint process.
Monitor Future Pay Periods
After a correction, review the next paystub to confirm the fix and verify any retroactive adjustments were applied correctly.
Conclusion: Protecting Your Earnings Starts with Your Paystub
Your paystub records hours, pay rates, gross pay, deductions, and year-to-date totals. Reviewing it each pay period helps you catch errors in pay rates, overtime, withholding, benefit deductions, PTO balances, classification, and YTD totals before they become expensive.
Regular paystub review reduces financial risk for employees and lowers compliance risk for employers. Most payroll errors are easier to fix when identified quickly.
Take action today: Review your most recent paystub using the steps above and compare it to your time records, benefit elections, and pay rate documentation. If you are an employer or HR professional and want a quick way to estimate how payroll changes may affect workers’ compensation costs, you can use this optional tool to model exposure: Get a workers’ comp estimate.
Make paystub review a routine habit. Catching errors early is usually faster and less expensive than correcting them months later.
