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

If your payroll hasn't yet fully processed, you can cancel it and make changes. Payrolls will fully process at 4pm PST on the day you process payroll. If you're looking to cancel a contractor payment, head to this article.  

1. Click the Payroll section and select Payroll history.
2. Navigate to the payroll check date. If your payroll can still be canceled we'll let you know, 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 to process. You may still be able to adjust the payroll (see below) without contacting us.
3. Read the cancel prompt and click Cancel this payroll.

Important: Depending on the check date of the payroll being canceled, taxes may have already been remitted to the agency, meaning we can not recoup the funds from the tax agency. At the end of the quarter, when quarterly filings are submitted, the agency will recognize an overpayment of taxes on the quarterly return and issue your company a refund or credit.

When canceling a regular payroll, the payroll settings will be saved if you go back to rerun it, so you won't need to re-enter the payroll details again. You can find this saved information in the now unprocessed payroll by clicking the Payroll section and selecting Run Payroll, and following the steps as normal to reprocess it.

If you're looking to change/adjust a pay period on a payroll that has been processed, you'll need to reverse and reprocess the payroll in order to make the change. Payrolls can only be adjusted once they fully process. If you only see the option to cancel a payroll, this means it hasn't yet fully processed, and you must cancel the payroll and rerun it in order to make any changes. 

If you need to adjust a payroll that you’ve already run, follow the steps below. To adjust contractor payments, click here. 

1. Click the Payroll section and select Payroll history.
2. Click View Details beside the payroll you want 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. 

Alternatively, follow the steps below to reverse or cancel an individual employee’s payroll from their people page.

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. One of the two options will show up:
   • If the payroll hasn't been processed and is eligible for cancellation, click cancel <your employee>’s payroll.
   • If the payroll has been processed and is still eligible for reversal, click reverse <your employee>’s payroll.
5. Follow the prompts to finalize the reversal or cancellation.

Important: Depending on the check date of the payroll being canceled, taxes may have already been remitted to the agency, meaning we can not recoup the funds from the tax agency. At the end of the quarter, when quarterly filings are submitted, the agency will recognize an overpayment of taxes on the quarterly return and issue your company a refund or credit.

If the check date is within 5 days from the time you reverse it, we have one attempt to pull the funds from the employees’ bank accounts. Your bank will attempt to recover the funds 1-2 business days after you submit the reversal, and if successful, the funds will be returned to your company bank account within 5-7 business days. If our first attempt to pull the funds from your employees’ bank account is unsuccessful, or if it’s after 5 days, you’ll need to recover the money outside of Gusto externally. We'll still reverse the amounts for tax and reporting purposes. 

Make sure to check your state’s overpayment laws to stay compliant before you reverse the payroll. 

Note: If you're using an accounting integration, you may need to manually reconcile any reversed entries.

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.