Edit, cancel, or reverse an employee payroll or contractor payment

Payrolls fully process at 4pm PT on the day you process payroll.

Payrolls can only be adjusted once they've fully processed—if you only see the option to cancel a payroll, you'll need to cancel it and rerun it to make changes. 

If you're looking to cancel a contractor payment, head to this article.  

1. Click the Payroll section and select Payroll history.
2. Find the payroll check date. We'll let you know if your payroll can still be cancelled, and you can click Cancel. 
   • If the cancel button does not appear, it means the payroll has processed and you've missed the deadline to cancel, as it's now been sent to your bank for processing. You may still be able to adjust the payroll without contacting us.
3. Read the cancel prompt and click Cancel this payroll.
   • If you canceled a regular payroll, the payroll settings will be saved, so you won't need to re-enter the payroll details again. Head to Payroll > Run payroll to reprocess it. 

Payrolls can only be adjusted once they've fully processed—if you only see the option to cancel a payroll, you'll need to cancel it and rerun it to make changes. 

Important reminders

• Payroll reversals that require us to recover direct deposited funds (direct deposit reversal) cost $10 per employee—you’ll need to confirm you understand this before processing any applicable reversal.
  • Regardless of if we’re able to recover the funds from your employees' bank accounts, you’ll be charged the $10 per employee (added to the next applicable invoice) for each request to recover funds. 
  • To avoid a fee, you can recover the funds from your employee outside of Gusto, but you’ll need to contact us so we can reverse the payroll for reporting purposes.
  • At this time, some reversals may not result in fees—you'll know if the potential to incur fees impacts you because we'll let you know in Gusto as you adjust a payroll. 
• Direct deposit reversals—these can only occur within 5 business days of the check date, and can only be attempted once.
  • If it’s after 5 business days, you’ll need to work with your employee to recover the funds outside of Gusto.
  • If a reversal is submitted, the bank will attempt to recover the funds within 1-2 business days.
    • If successful: Funds will be returned to your company bank account within 5-7 business days.
    • If unsuccessful: You’ll need to work with your employee to recover the funds outside of Gusto.
  • We'll still reverse the amounts for tax and reporting purposes.
• Staying compliant—make sure to check your state’s overpayment laws before you reverse the payroll:
  • For customers with Priority support: Submit a ticket to the HR experts—admins can upgrade the plan at any time.
  • For all other customers: Visit your state labor office or locality's website for current employee overpayment laws in your state(s).
• Tax payments—depending on the check date of the payroll being adjusted, we may have already paid some taxes. When this happens, we cannot recover the funds from the agencies.
  • At the end of each quarter when we submit your quarterly filings, agencies will recognize a tax overpayment, and issue your company a refund or credit.
• Accounting integrations—if you’re using one, you may need to manually reconcile any reversed entries.

Adjust a payroll that you’ve already run

1. Click the Payroll section and select Payroll history.
2. Click the check date of the payroll you need to adjust.
3. Click Make an adjustment.
   • If you don't see this option, click Contact us so we can assist with the adjustment or reversal.
4. Let us know what you need to adjust, and follow the prompts that follow. 

Reverse or cancel an individual employee’s payroll

1. Click the People section and select Team members.
2. Click your employee's name.
3. On the right side of the page under Paystubs, select the desired pay period from the dropdown.
4. Click Adjust this payroll.
5. The payroll summary page will open. In the Adjustments box, click Make an adjustment.
   • If you don't see this option, contact us from the Help or Priority support section of your account to make an adjustment.
6. Follow the prompts to finalize the reversal or cancellation.

Certain contractor payments can be canceled or adjusted in Gusto without having to contact us for help. If you only see the option to cancel a contractor payment, this means the payment hasn't fully processed, and you'll need to cancel and rerun the payment to make any changes.

Cancel or adjust a contractor payment

1. Click the Payroll section and select Payroll history.
2. Click the Contractor payment history tab.
   • Under the payday, if a payment can still be canceled or adjusted, there will be a tag letting you know. If the tag doesn't appear, continue with the steps below for us to assist.
3. Click View details under the "Actions" column.
4. Choose the option available–the cancel option is not available once the payment has been processed.
   • Cancel the payment:
     • Scroll down to the contractor name, click X cancel payment, and then click Cancel Payment to confirm.
   • Adjust the payment:
     • Under the “Adjustments” section, click Make an adjustment. Then, tell us what you need to adjust. Based on your selection, we’ll let you know the next steps required to adjust the payment.
     • If you don't see this option, click Contact us so we can assist with the adjustment or reversal.

Contractor payment reversals–general info

• Reversing before the check date
  • We’ll return the funds to your bank account within a few business days. 
• Reversing on or after the check date
  • We’ll correct the reporting, but you’ll need to recover all funds from the contractor directly (direct deposited or issued by check)–banking regulations prevent Gusto from recovering the funds on your behalf.