Pay is delayed for 40,000 federal workers

More than 40,000 federal employees expecting direct-deposit paychecks Friday did not receive their funds because of an error at one of the government’s payroll processing centers, officials said.

The Interior Department’s Interior Business Center, which was responsible for the mistake, said in a statement Friday that workers would receive their money Tuesday.

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The official pay date for the affected employees is the first Tuesday after a pay period ends, meaning their next checks are technically due Sept. 17. But employees whose checks are deposited directly into bank accounts normally receive their funds early, on the Friday before the official payday.

The mistake raised concerns about possible overdrafts for employees who were counting on the funds being available Friday.

The processing center said the federal government cannot compensate employees for overdraft fees, based on past comptroller general decisions. But the agency promised to make requests on behalf of employees that their banks waive any penalties resulting from the mistake.

The center said it was contacting more than 1,800 banks to alert them of its error and request that the institutions work with customers to address the situation. Some banks have already agreed to recognize the electronic payments as being made on Friday rather than Tuesday, the agency said.

The center “knows that this is a serious matter for those affected and sincerely regrets any inconveniences the error may have caused,” the agency said.

The processing center entered the wrong date for the electronic transfer of funds, the agency said. Normal processing will resume for the next pay period.

The center is developing a plan to catch similar mistakes and prevent the issue from recurring, according to the statement.

The Interior Business Center is one of the federal government’s payroll processors. It handles payments for 240,000 employees at 42 agencies, including NASA, the Federal Election Commission, the Pension Benefit Guaranty Corp. and the National Archives and Records Administration. Only 23 of the agencies were affected by the payroll mistake.

The government previously used 26 payroll systems, but the George W. Bush administration consolidated the programs as part of its 2002 management agenda. The initiative took seven years to complete, but processing now takes place through four shared-service providers managed by the Pentagon, General Services Administration, Agriculture Department and the Department of the Interior.

The Office of Personnel Management has estimated that the new system will save $1 billion over 10 years, largely because it standardizes processes and removes complex agency-specific requirements that had become barriers to modernization.

Lisa Rein contributed to this report.

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