Payroll errors affect Navajo Nation employees after system transition

WINDOW ROCK

The Navajo Nation has acknowledged payroll errors affecting some employees following its most recent pay period, attributing the discrepancies to data migration issues tied to the rollout of a new human resources system. A corrective payroll run is scheduled for early January.

In a memorandum dated Dec. 31, the Navajo Nation Department of Personnel Management informed employees that payroll for the pay period ending Dec. 26 had already been completed and committed before unresolved issues were identified within the Dayforce system, a cloud-based human capital management platform recently integrated into the tribe’s enterprise resource planning framework.

According to the memo, the payroll errors did not affect all employees. The issues primarily involved workers whose pay includes non-tax deductions, such as employee housing payments or loans, which were not withheld as expected. In other cases, hours were not properly adjusted, resulting in overpayments.

Controller Sean McCabe said the problems stemmed largely from a large-scale data migration required to move employee records from older systems into Dayforce, including tax information, withholding data and personnel files.

“In order to have the system integrated properly, we had to do a big data migration,” McCabe said. “And what it looks like right now is maybe some of that data didn’t come over correctly and that resulted in some variances in certain withholdings.”

McCabe emphasized that the errors did not reflect salary increases or bonuses, noting that gross pay amounts remained unchanged. Instead, incorrect withholding calculations caused some employees to see higher net pay on their checks.

“It’s not that we paid them more, meaning their salaries went up,” he said. “Their gross pay didn’t go up, but their net pay did, potentially, because some of the withholdings weren’t calculated correctly.”

Holiday hours, overpayments

He said some isolated issues also involved holiday pay calculations related to Christmas and administrative leave, which in limited cases resulted in actual overpayments.

“If there was a potential of doubling up on Christmas hours or admin leave hours, obviously we overpaid,” McCabe said. “Those are the instances where we would withhold that on a future paycheck.”

McCabe said preliminary reviews suggest payroll variances, largely involving withholding calculations rather than salary amounts, may have appeared in roughly 10% to 15% of payroll records, though the exact number is still being finalized.

He said some discrepancies were identified and corrected before checks were issued.

To address both overpayments and underpayments, the Navajo Nation announced an additional corrective payroll run scheduled for Jan. 6. McCabe said the supplemental payroll is primarily intended to ensure employees who were underpaid receive their wages promptly, while overpayments and withholding variances will be corrected through future payroll adjustments.

“In the instances where there were underpayments, they would receive an additional payment,” he said. “But my knowledge right now is that there weren’t many of those. Overpayments will be adjusted on the next paycheck.”

Council concern over corrective measures 

The payroll transition is part of a broader enterprise resource planning overhaul that, for the first time, fully integrates the Navajo Nation’s accounting, human resources, vital records and budget systems.

“For the first time, Navajo Nation has integrated systems that actually talk to each other,” McCabe said, adding that the goal is to improve accountability, transparency and efficiency across government operations.

He said the timing of the system launch was critical, as the first payroll of the new calendar year needed to be processed through Dayforce to avoid tax reporting complications.

“It was imperative that we got Dayforce and payroll up and running outside of the old system by the first pay period in January because that begins our new tax year,” McCabe said. “That was something that I, as the controller, insisted on.”

The memo also stated that in cases where overpayments are considered severe, stop payments may be issued and negative account balances could result once corrections are processed. That language has raised concern among members of the Navajo Nation Council.

Delegate Amber Kanazbah Crotty said Wednesday she is seeking clarification on how those corrective measures will be implemented and whether employees could be forced to absorb bank fees or financial penalties tied to payroll errors.

McCabe said his office is working closely with the Department of Personnel Management and external implementation teams to resolve the issues and prevent future errors.

“Anytime something like this happens where there’s variances in spending, we take it very seriously,” he said. “None of this was done purposefully. We turned the switch on, some of the data wasn’t quite correct, and now we’re correcting it.”

The Department of Personnel Management apologized in its memo for the inconvenience and stated additional updates will be provided as corrections are completed.

The Navajo Times called the Department of Personnel Management for comment, but the call was not answered. Executive staff were most likely out of the office for the holidays.

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