The City of Hoover is having to work with a third-party vendor to fix payroll issues experienced during a transition to a new system. Underpayments, overpayments and retirement account reporting problems have plagued city employees' paychecks since July.

"It's always our goal to make sure that all Hoover employees are paid accurately and on time," Hoover's city administrator Allan Rice said in a video to city employees in September. "We know that that's been a challenge ever since we started our conversion to our new software program."

The old program used to pay employees was over 25 years old, so the city was forced to transition to a new system. The new software, by Tyler Technologies, was implemented in July after months of planning. Rice said despite their intentions, the transition was anything but seamless.

"We've had multiple rounds of different types of errors that affected different types of employees," Rice told 1819 News.

Rice said the problems were caused by the software, not city employees.

As far as getting the kinks worked out, Rice said underpayments have been addressed for the most part. He said in most situations, funds have been delivered to employees who were underpaid by the end of payday. However, he did say some employees have had to wait a few days for those payments to go through, but as of Thursday, the city was caught up on paying those who were underpaid.

Some fire department employees were paid more than what they were owed by the city because of the software glitch, which affected overtime pay, not base pay. In the current round of overpayments, 110 employees were overpaid, totaling around $190,000, which now must be paid back.

"The amount owed ranges from $39 to $11,000," Rice explained to 1819 News. "It's a broad range. We have a number of employees that noticed they were overpaid. They put it aside, they notified us, and they waited until we said, 'Hey, it's time for us to have to recover this money."

While some firefighters said they alerted the city about the issue months ago, it was not corrected right away, and the new payment method has been confusing due to the way the payments were scheduled. Rice said since July, the chief financial officer has been working with Tyler Technologies to get things in order.

"We knew about this months ago, and it's taken that long to get Tyler Technologies to acknowledge there is a problem and to make the correction," Rice explained. "We communicated this very well with payroll and all of our department heads."

Employees cannot pay the city back in a lump sum, and funds must be reversed through payroll because of taxes and benefits.

"We really appreciate people who just want to write a check to pay back the city, but that could really mess up their W-2s," Rice said.

The city worked with the fire department and came up with a plan to have the last four checks of the year garnished so the money could be paid back by the end of the year. Fire administrators proposed the plan, Rice claimed. However, that would mean some fire employees who did not set the overpaid funds aside would not have another check until 2023. So, Rice said he worked with an attorney for the firefighter union to devise a plan to allow the money to be garnished over eight pay periods instead of four, if an employee chooses.

"As far as I'm concerned, it has been resolved," Rice added. "We worked out [Wednesday] that we are going to let them decide if they want to stick with the original four pay periods, or for those who spent the money and don't have it, they can have eight pay periods, and we figured out a way to deal with the taxation and the W-2s so nobody will be messed up on their taxes."

In an email Thursday, the city notified fire employees of the new option and explained how to choose the way they will pay the city back.

"All employees will be provided with a selection form to sign indicating which option they wish to use to repay funds," the email stated. "These forms will be available at all fire stations by the end of this week. Please note the following:

  • All forms are due back to the Finance Department by 4 pm on Wednesday, 11/23. Fire Administration will be responsible for distributing, collecting, and submitting the forms to Finance.

  • Any employee that owes a repayment and does not return a form by the deadline will automatically be placed on the four-cycle repayment schedule.

  • Forms must be witnessed (not notarized) by another party in addition to the employee signing the form."

Rice, a former firefighter himself, said the city is obligated to collect those funds back from the firefighters because that is what taxpayers would expect.

"The issue is, this is taxpayer money that was overpaid to these individuals, and we don't have the option to write it off, and we don't have the option to let them have a year to pay it back because that constitutes an interest-free loan of taxpayer money, which we are not authorized to do," Rice continued. "So, we have to recover this money, and nobody showed up and said, 'Hand us $11,000,' or $6,000 or whatever it is. We actually took the proposal that the fire department brought us."

Firefighters told 1819 News they didn't realize the problem immediately and overtime added up quickly. While they have no problem paying the city back, they are thankful to have an option other than foregoing their paychecks for the rest of the year.

There is another option for employees to sell annual leave, but it has to be done according to the city's personnel policies and procedures.

"However, this is a separate transaction from the repayment of overpaid funds," Rice said. "Employees selling back annual leave will see funds added to your payroll deposit for annual leave sold, and they will also see the deduction for repayment of overpaid funds. Payroll cannot simply deduct time from an employee's annual leave balance and use it as a credit against the funds that are owed back to the city."

Tyler Technologies, a software company that has serviced many other municipalities in Alabama, has offered several hours of technical support to Hoover for free to help during the resolution process. The city is also changing what components of the software it will use going forward. There are two components to the current program, one that tracks payroll and one that keeps up with time. The two components are supposed to work together, but Rice said that was not the case for the city of Hoover.

"We expect some minor glitches in any transition of software," Rice said. "But this really was a lot. I feel for those who have had to deal with this, from the payroll ladies to those having to keep up with how much money they owe the city now."

The city has chosen to stay with Tyler Technologies but to transition to another company for its timekeeping module. That transition should be completed within eight weeks, and Rice said the two programs are compatible.

"We talked to other cities who have done this, and it seems to be working for them with no problems," Rice said.

As for the retirement funds, Rice said RSA has been working with the city since the beginning of the transition to the new software to sort out any retirement fund issues.

Rice asked employees in a video message in September to communicate directly with their chain of command within their department about any paycheck issues. He also said the city council cannot do anything about the issue.

"The reality is, administering payroll falls under the mayor's office and falls under the administration," Rice explained. "So, we're not going to tell you to not communicate with city council members, but quite a few employees have contacted different council members, and quite honestly, there's just not anything a council member can do about this issue. We have to work with the software company directly, which we're doing. We're holding their feet to the fire and enforcing our contract with them and trying to get all of these issues corrected so that everybody gets paid accurately and on time."

Rice said emotions have been high for some employees during the back-and-forth over repayments. He said some communications to payroll employees have been unprofessional. In the email Thursday, Rice said, "Unprofessional communications directed at any other city employee will be addressed through the disciplinary process. Specifically, personnel in the Payroll Unit and Finance Department did not create the errors that led to these overpayments. This was a flawed configuration by the payroll software vendor. City of Hoover employees have been working to resolve these errors, and they will not be made the brunt of your displeasure at having to repay the funds that you were overpaid."

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