What's covered in this guide?
When employees are paid by direct deposit, payments are sent through the ACH banking network. In some cases, a bank may notify Workforce Payroll of an issue with a transaction.
As an employer administrator, you may encounter two types of notifications:
ACH Returns – the employee’s bank rejected the payment
Notices of Change (NOC) – the bank accepted the payment but requires corrected account information for future payments
Understanding how these notifications work — and what actions are required — will help ensure employees receive their pay as quickly as possible.
What is an ACH Return?
An ACH Return occurs when the employee’s bank rejects a direct deposit after it was sent.
Common reasons for returns include:
Invalid bank account number
Closed bank account
Incorrect routing number
Account unable to receive deposits
When a return occurs, the payment is sent back through the banking network to Workforce Payroll. If you are a Kotapay member, it will be returned to your bank account.
ACH Return timeline
ACH returns are not immediate and usually occur within two business days of the original payment.
Typical timeline:
Payroll is processed and the payment is sent to the employee’s bank.
The bank attempts to deposit the funds.
If the account information is invalid, the bank rejects the payment.
The funds are returned through the ACH network to Workforce (or your Kotapay-linked account).
The employer administrator is notified via email once the return is received.
What administrators need to do (Kotapay)
If you are not a Kotapay client (or you don't know what Kotapay is), skip to the next section.
If you receive a return notification:
Step 1 — Confirm correct banking information
Work with the employee to confirm that their bank account details have been corrected in Workforce.
Step 2 — Repay employee
The employee will need to be repaid. You can pay the employee manually via cash or check, or you can pay them through Workforce. If you pay them through Workforce, pay them via an off-cycle pay run, and be sure the amount is a Reimbursement in the amount of the returned pay. If you pay them with another earnings amount, you will be incorrectly doubling the tax liability.
What administrators need to do (Non-Kotapay)
If you do not know what Kotapay is, you should follow the below instructions:
If you receive a return notification:
Step 1 — Confirm correct banking information
Work with the employee to confirm that their bank account details have been corrected in Workforce.
Step 2 — Repay the employee
If you notify Workforce that the bank account has been corrected within 48 hours of you receiving the return notification, we will re-process the payment for you, free of charge. If you miss the 48-hour window, Workforce will return the funds to your bank account, and you will be responsible for re-paying the employee:
You can pay the employee manually via cash or check, or you can pay them through Workforce. If you pay them through Workforce, pay them via an off-cycle pay run, and be sure the amount is a Reimbursement in the amount of the returned pay. If you pay them with another earnings amount, you will be incorrectly doubling the tax liability.
Notices of Change
A Notice of Change (NOC) occurs when the employee’s bank accepts a payment but notifies Workforce that the bank account details need to be corrected for future payments.
This may happen if:
The routing number has changed
The bank requires a formatting correction
Account information needs updating
What administrators need to do:
Review the notification.
Update the employee’s bank account information in Workforce.
Ensure the change is made before the next payroll run.
If the update is not made, future direct deposits may fail and result in an ACH return.
Best practices to avoid returns
To reduce payroll disruptions:
Ask employees to carefully verify their banking information when entering it
Encourage employees to double-check routing and account numbers
Update any Notices of Change before the next payroll run
Frequently Asked Questions
What happens if an employee enters incorrect bank details?
If incorrect bank details are entered and the bank rejects the payment, an ACH return will occur and the process described above will apply.
What if an employee says their bank details were wrong but there was no return?
If a payment was successfully delivered to the bank account provided, the funds cannot be automatically recovered.
In this situation:
Workforce cannot retrieve the payment through the normal return process.
The administrator may request that Workforce attempt a bank reversal due to fraud.
However, reversals are only possible in cases of verified fraud. Examples of fraud include:
The employee’s bank account was compromised or hacked
Banking details were maliciously changed without the employee’s knowledge
Examples that are not considered fraud include:
An employee accidentally typing the wrong account number
An employee providing incorrect banking information
If funds were deposited into an incorrect account due to user error, the employee may need to work directly with their bank to attempt recovery. You may request a trace number that we will provide for the employee's bank to track down the transaction.