Payroll errors are rarely dramatic. A missed rate change, a deduction that never stopped, overtime coded as straight time. They are small, they repeat every cycle, and in states like Massachusetts they can carry triple damages.
The fix is boring and effective: a short review before every payroll is submitted. These are the 12 checks we run, in the order we run them.
Before You Open the Payroll System
1. New hires are complete. Every new employee has a signed W-4, state withholding form, I-9, direct deposit and the right pay rate, pay schedule and work location. Work location drives state withholding and state paid leave contributions.
2. Terminations are processed, with final pay timed right. Final pay deadlines vary by state. Massachusetts requires final wages on the last day for an employee who is fired or laid off. Connecticut requires the next business day. New Hampshire and Vermont allow 72 hours. If someone left this cycle, confirm the final check and accrued vacation payout are on time.
3. Rate and status changes are in. Raises, promotions, shift differentials and full-time to part-time changes. Check the effective date, not just the new rate.
Inside the Payroll Preview
4. Hours match timekeeping. Compare total hours in the payroll preview against the timekeeping report. Look for anyone with zero hours who should have some, and anyone with unusual totals.
5. Overtime is calculated correctly. Overtime is based on hours actually worked over 40 in the workweek, and the regular rate has to include shift differentials and nondiscretionary bonuses. This is one of the most common wage and hour claims.
6. Exempt employees really are exempt. The federal salary threshold for most exemptions is $684 a week ($35,568 a year), and job duties have to qualify too. Title alone does not make someone exempt.
7. Deductions start and stop on time. Benefit deductions should match the carrier bill. A deduction still running for someone who dropped coverage, or missing for someone who enrolled, is a reconciliation problem waiting to happen.
8. Retirement limits are respected. For 2026, the 401(k) employee deferral limit is $24,500, with an $8,000 catch-up at age 50 and up, and $11,250 for ages 60 to 63. Employees who earned more than $150,000 in FICA wages last year must make catch-up contributions as Roth.
9. Social Security stops at the wage base. The 2026 Social Security wage base is $184,500. High earners should stop having Social Security tax withheld once they cross it. Medicare has no cap.
Before You Submit
10. Net pay looks right. Sort by net pay and scan the top and bottom. Negative or unusually high net pay almost always points to a setup error.
11. Totals match last cycle, or you know why they don't. Compare gross wages and headcount to the previous payroll. A big swing should have a reason you can name.
12. Reimbursements are coded as non-taxable. Mileage reimbursed at or below the IRS rate is not wages. The 2026 rate is 72.5 cents per mile for January through June and 76 cents for July through December.
Make It a Habit, Not a Heroic Effort
The checklist only works if it happens every cycle. A few things make that easier:
- Set a payroll cutoff two business days before your provider's deadline
- Keep a running change log so nothing lives only in someone's email
- Have a second person approve payroll, even for five minutes
- Reconcile benefit deductions against carrier invoices every month
Where King & Co. Helps
We run pre-payroll reviews, clean up deduction and setup errors, and manage payroll in whatever system you already use. Billing is hourly, so a quick review costs very little compared with fixing a quarter of errors.
This guide is general information, not legal or tax advice. Book a free 15-minute call and we will tell you which of these checks your process is missing.
Josh runs HR, payroll and PBJ support for employers across New England and New York, from five-person offices to multi-building nursing home groups. He works in every major payroll system and answers the phone personally.
Book 15 minutes with Josh