HR Fast Facts: Why Does My New Employee’s Paycheck Have Deductions Already?
Your new hires may already be seeing benefit deductions from their paychecks. Understand why here.
After the effective date for your employee’s benefits, your payroll provider may push your employee’s deductions amounts to payroll by check date — not pay period — for the months that they have coverage. Even if you have a new employee and they’ve only worked 2 days before their first check, they’ll see part of their monthly deductions in their first paycheck after their benefits begin.
For example, assume the following:
- A new hire starts work on September 25.
- They enroll in Medical Insurance for an effective date of October 1 and a monthly deduction of $100.
- This employee is paid on a semi-monthly basis (2 pay dates: 15th and end of month).
The employee’s first pay period is Sept 25 through October 8. They’ll receive their first paycheck on October 15. Since this date is after their effective date for Medical, their first paycheck will include half of their monthly Medical deductions ($50) for October coverage, and the second half in their second paycheck for October.
