Austin City Employees Forced to Repay $1.4M Payroll Error

Workers say they feel uncomfortable with city's terms for recouping overpayments

Apr. 18, 2026 at 2:22am

Got story updates? Submit your updates here. ›

A high-end, photorealistic studio still-life photograph featuring a stack of U.S. dollar bills, a calculator, and a pen arranged elegantly on a clean, white seamless background, conceptually representing the abstract concepts of corporate finance, payroll errors, and employee compensation.A meticulous studio still life captures the financial complexities and human impacts of a municipal payroll error.Austin Today

The City of Austin accidentally overpaid hundreds of government employees by a total of $1.4 million last month, and is now requiring those workers to repay the money through deductions from their paychecks. Some employees say they feel uncomfortable with the city's terms and conditions for the repayment plan.

Why it matters

The payroll error and the city's handling of the repayment process have caused significant frustration and distrust among Austin municipal workers, raising concerns about transparency, fairness, and the city's relationship with its employees.

The details

The payroll error occurred when a spreadsheet was uploaded to the city's Workday system, leaving a box blank and causing the system to override existing information used to determine whether a job is exempt or non-exempt from overtime. This led the system to treat each week in the two-week pay period separately, resulting in some employees receiving nearly double their normal pay on March 13. The city caught the error early and notified impacted employees before the paychecks hit their bank accounts.

  • The payroll error occurred in March 2026.
  • The city notified impacted employees on March 12, 2026, before the paychecks were deposited.
  • The city gave employees until April 10, 2026, to sign an agreement selecting how they would return the overpaid funds.
  • The first impacted paychecks with deductions will go out on May 8, 2026.

The players

Carol Gutherie

Business manager of AFSCME Local 1624, a union representing some of the affected city employees.

City of Austin

The local government that accidentally overpaid hundreds of its employees and is now requiring them to repay the funds.

Got photos? Submit your photos here. ›

What they’re saying

“If you messed up their paycheck. It was your error.”

— Carol Gutherie, Business manager of AFSCME Local 1624

“I couldn't believe it. I have been working with the city for a little over 25 years. I don't recall this ever happening.”

— Carol Gutherie, Business manager of AFSCME Local 1624

“This push to sign the contracts didn't go over well with the employees either, because they felt very intimidated. Like if they didn't get it signed right away, that something was going to happen.”

— Carol Gutherie, Business manager of AFSCME Local 1624

“They've been very frustrated, they don't trust the city.”

— Carol Gutherie, Business manager of AFSCME Local 1624

“I get they need to get everything back, but I think they just went about it wrong from the very beginning.”

— Carol Gutherie, Business manager of AFSCME Local 1624

What’s next

The city said it needed time to process and schedule the deductions before the first impacted paychecks go out on May 8, 2026.

The takeaway

This payroll error and the city's handling of the repayment process have eroded trust between Austin municipal workers and their employer, highlighting the importance of transparency, clear communication, and fair treatment when dealing with administrative mistakes that impact employee compensation.