In the world of school business, few areas demand as much precision as payroll. Every incorrect code, misclassified employee, or missed tax affects departments and entire districts. And when errors occur, the consequences for both the district and the employee can be costly and complex.

Here are a few of the most common payroll mistakes and strategies to avoid them:

Misclassifying Positions

One of the most frequent errors involves assigning the wrong employee classification. Whether a position qualifies as certificated or classified has major implications for payroll, benefits, and retirement reporting. Missteps in this area can lead to inaccurate contributions and even retroactive repayments.

Tip: Always reference the California Education Code to determine the correct classification and ensure the position is set up correctly from the start.

Incorrect Retirement Reporting

Each retirement system has its own criteria. For example, reporting a classified substitute’s earnings to CalSTRS rather than CalPERS can trigger required reversals, refunds, and additional contributions by the employer.

Tip: Train staff to distinguish between retirement systems and their applicable rules. Encourage them to monitor hours worked to avoid unintentional misreporting.

Improper Use of Pay Calendars

Calculating pay for staff who start after the school year begins or who leave mid-year can be tricky. Errors in this process may lead to incorrect pay, withholding issues, and employee confusion.

Tip: Establish templates and protocols for calculating prorated salaries. Double-check start and end dates against payroll calendars before processing.

Failing to Identify Independent Contractors

Misidentifying a contractor as an employee, or vice versa, can trigger IRS penalties and back taxes. This risk is especially high when hiring for short-term or specialized services.

Tip: Review contractor agreements carefully. When in doubt, err on the side of verification. The IRS and EDD both provide clear guidance on how to classify.

Invest in Prevention

The good news? These risks are preventable. CASBO’s Payroll Essentials certificate program is designed for exactly this kind of capacity-building. This hands-on, 2½-day training helps payroll and retirement staff gain fluency in California school payroll regulations, tax law, and retirement systems. It offers quizzes, real-world scenarios, and templates staff can use immediately in their districts.

Equip your team with the right tools and training to keep every paycheck accurate, compliant, and on time.