IU faculty and staff employees received an email Sept. 20 announcing a change to the payroll, a change some find concerning.
The switch will cause some employees to have additional taxes and could cause them to receive a smaller tax refund in 2019, said Howard Swyers, Fiscal Officer at the Department of Economics at IU.
Pay for December 2018 will be distributed on the last day business day of the year rather than on the first business day in 2019, meaning employees will receive 13 paychecks for the 2018 calendar year rather than 12. This paycheck format will only happen in 2018. In 2019 and afterward, faculty and staff employees will receive 12 paychecks a year.
"Multiply these numbers by the thousands of IU employees affected, and the number reaches in the millions of dollars,” Swyers said.
Employees' salaries won't change; only the the timing of the payment will change, according to the IU payroll website.
For example, employees who normally earn a salary of $50,000 a year would earn $55,000 in 2018 because of this change, Swyers said. The change would force them to pay 22 percent more in taxes. This could be equivalent to an additional house payment and car payment for employees, Swyers said.
He said he was concerned for those who have large families or live from paycheck to paycheck.
“Suddenly, they’re taking money out that you don’t have, and that hurts,” Swyers said.
The email also said University's payroll group is doing its best to make it a smooth transition.
“While we are confident this change serves the best interest of our employees and the university, we realize that it will raise questions and will require adjustments to payroll, taxes, and benefit deductions,” Director of payroll Stephen Miller wrote in the email.
This change, however, will affect only employees paid on a monthly basis, paid professionals and academic staff, according to Miller's email.
Miller declined to comment at this time because of the busy beginning of the quarter, but he encouraged people to look at the FAQs on the payroll website about the change.
An email from IU Communications Director Nicole Wilkins said more information will be available in the coming weeks.
Although the change is more than a year away, employees will start seeing changes in their 2018 paychecks in January, according to the email. Swyers said he thinks IU payroll is making the change seem further away than it really is.
Miller also said in the email that the President’s Initiative to Reduce Administrative Barriers at IU work group approved the decision to change the payroll calendar to provide consistency in the calendar and improve employee experience.
Swyers said he does not see a need to change it because the University has not done something similar before.
“They’re saying after 35 years it’s just not working this way,” Swyers said.
Swyers said he thinks a better solution would be to shift payments for each month one day later because it would prevent the 13 checks.
“There’s other solutions to accomplish what they want to accomplish,” Swyers said.
Swyers also said this change could affect employees beyond 2018 because some people with student loans make income-based payments. He said their 1040 tax form, the standard IRS form for filing tax returns, would reflect an additional payment that the person did not earn.
Swyers said his colleagues were concerned about the change, too.
“Considering the ramifications of going this route, I can’t imagine that changing the 11 months would cost IU the money that the employees are going to pay in taxes,” Swyers said.
The FAQs indicate that many tests are still being done to evaluate the effects. Those who have further questions or concerns are encouraged to email firstname.lastname@example.org.