When a computer glitch inflated their paychecks, city employees knew they’d have to return the extra money. They didn’t expect to be threatened with lawsuits.
On March 13, after an employee made an error in the payroll system, the City of Austin inadvertently overpaid 675 employees a total of $1.4 million. Some workers received more than double their normal pay, creating confusion and concern about how the city would recover the funds.
The city quickly moved to claw back that money, directing employees to sign a repayment agreement by April 10 “in order to fully resolve the dispute, in order to avoid a contested lawsuit, and in order to avoid any other wage issues that could arise between the parties based on (employee name) employment.”
Austin Current spoke with several city employees affected by the payroll problem but were not authorized to discuss the issue publicly. The news organization is not naming them. The employees said they felt bullied by that language, saying some workers signed the agreement just to avoid potential legal action. Others refused to sign the paperwork by the April 10 deadline because they couldn’t get timely information, including verification about the overpayment amount, from the city.
“They’re asking me to sign a legally binding agreement, so I want to make sure it’s right,” one employee told Austin Current.
The overpayment dispute raises broader questions about transparency and accountability when the city makes costly errors that affect its employees. While city staffers say they tried to respond quickly and in good faith, some employees say the compressed timeline and limited information left some workers unable to make informed decisions before the deadline.
About 10%, or 67, of the affected employees did not sign the agreement by the deadline. As of Wednesday morning, that number was down to 6%.
“We understand this has caused frustration, apologized to our employees, and have thanked them for their understanding and patience,” said Susan Sinz, director of the city’s human resources department. “We worked to correct the issue as soon as it was identified and have put systems in place to ensure that it does not happen again.”
How the mistake happened
The paycheck error traces back to March when a city staff member left a nonrequired data field blank on a spreadsheet used to update job descriptions, which was then uploaded into the payroll system.
The blank field caused the system to overpay some employees, in some cases doubling their regular pay.
City staffers discovered the decision quickly. On March 12, the day before the erroneous paychecks went out, employees received an email saying their checks would reflect overpayments and they would need to repay the money.
The mistake affected less than 4% of the city’s 17,000 employees.
On March 26, HR informed employees they would need to repay the money largely through payroll deductions. Staffers could spread the payments over four pay periods. People who overpaid more than $5,000 had the option to repay the money by check.
Confusion, deadlines and frustration
Shortly before 5 p.m on April 6, employees received an email from the city asking them to sign the repayment agreement by April 10, giving some workers just days to respond. Staffers said they wanted more details about how much would be taken out of each check, potential tax implications and other matters. But those answers came too slowly for some people.
City officials answered most questions within an hour, a city spokesperson said. Some delays occurred because human resources didn’t have all the necessary information and had to coordinate with payroll. Until then, human resources told employees they could not get additional details. Still, the affected employees were expected/told to sign.
“Payroll is currently working to correct all existing payroll deductions while also processing payroll for the entire City, so it is difficult to provide itemized details for each employee,” Brent Waters, a human resources quality assurance auditor for the city, wrote in several emails reviewed by Austin Current.
Carol Guthrie, business manager for the city employee labor union, AFSCME Local 1624, said the sluggish release of some information frustrated employees and made them skeptical of the city’s response.
“It goes without saying, if I messed up some of my employees’ checks, you better believe I’m going to have each one sitting right in front of me, telling them, here’s what we did, here’s how we’re going to fix it,” she said.
Employees also told Austin Current the mention of legal action felt aggressive, especially considering that it was the city’s mistake.
The lawsuit language was not intended as a threat, a city spokesperson said, but rather reflects the legal nature of the agreement and the city’s obligation to recover misallocated taxpayer money.
“Our employees deserve fairness and clarity on this matter, and taxpayers should expect transparency when it comes to the performance of the city departments they fund,” said Austin Council Member Marc Duchen. “That’s why I pushed so hard for the citywide audit that was recently approved by City Council. The audit should give us the information needed to put cost-effective guardrails into place that prevent problems like these from occurring again.”
The city is continuing to work with employees who missed the deadline, some of whom were sick or on leave or had outstanding questions, a spokesperson said.
Guthrie said the union spent weeks pushing for clearer answers for its members but struggled to get responses. Ultimately, she said, better communication would have prevented much of the confusion and distrust.
“This was handled very poorly,” Guthrie said. “Very poorly.”
