Vermont workers' paychecks caught up in national payroll provider snafu
Employees at 200 Vermont companies are getting their paychecks a day late, or still waiting, after a national financial institution left hundreds of payroll providers in a lurch.
PayData is one of those companies that found itself in a sticky situation this week with no warning. Officials there say it's been one frustrating delay after another from their national bank, which had promised that they would have the money through to customers by the end of the day Friday.
Employees at Hazelett in Colchester are hard at work, but they're also waiting for their paychecks. The Colchester-based heavy equipment supplier's payday was supposed to be Thursday.
"Lo and behold Thursday morning as employees -- as they often do -- they check their accounts and they found that the funds hadn't been deposited into their accounts," said Hazelett's David Diederich.
He says they reached out to their payroll provider, PayData, and learned that they were dealing with a problem on the national level. As Thursday came and went, Hazelett decided to offer employees cash advances to make sure they didn't get caught in a bind. A dozen expressed interest.
"Making sure that people get paid on time for the good work that they do is pretty important to us," Diederich said.
This is not just a local issue though. In an email to its customers, PayData said it's impacting hundreds of different payroll providers around the country. They say they're doing everything they can to make it right, including fronting their own money to make those deposits clear. "It's extremely frustrating," said Paul Trahan, PayData's president.
He says on Tuesday everything happened as usual. They sent the direct deposit files to the national bank, Cachet Financial, that distributes the money to the employees. The money was taken out Wednesday as expected. But then on Wednesday night they got word that there was a problem with that national financial services company, telling them in an email that they wouldn't be releasing the money that night. There was no warning. "It was a bit alarming, to be quite frank. It's never happened before," Trahan said.
In 31 years of doing business, he says he's never seen anything like it. While they worked to commuicate with both the national company and their customers, when they didn't see the money by noon Friday it became a critical situation. So PayData decided to front several million dollars of their own cash to make sure their customers' employees got paid. "We take payday extremely serious," Trahan said. "We don't take this process lightly... we do not want employees to wait the weekend to get their pay."
He says, they'll get their money back eventually, and their decision to front their own money impressed customers like Hazelett. "People need their pay to buy groceries, pay bills, and whatnot, so they're pretty anxious to see that their funds end up in their account," Diederich said.
So where do the paychecks stand as of Friday? PayData's president says they were able to get some their money transferred to employees before the end of the day. But he says Cachet, which promised to get the money out by the end of business, didn't. Instead, it dated the payments to Monday. So everyone else will get their money then.
PayData officials say they are incredibly frustrated with Cachet for that.
They're now reaching out to their customers to update them.
It's important to note that this is only customers who sent their payroll in on Tuesday for Thursday's payday. Everyone else is fine.