An error that leads to employees not being paid is a pretty substantial error, particularly for an employer that likely gets federal dollars in some fashion or another.
Many years ago, I picked up a part time job at a private university. The particular department I was working in was partially grant-funded (federal). When it came time for my first paycheck, I got a bit of run around regarding "paperwork", and was told I would be paid for that time, plus the next pay period on the next check. The next payday rolls around, still no paycheck. This time, when I talked to HR, I cited the laws regarding timely pay. She said there was nothing she could do about it, and I'd have to wait until the next payday. I don't think so. I called the wage and hour division of the DOL and filed a complaint. Within an hour, I got a call from asking if I could meet in the university's HR office at a specific time later that day. I could, so off I went. When we got there, the DOL employee informed the HR woman that she had three choices. She could cut a check for the actual amount I was owed, or a reasonable estimate, out of university funds; she could write a personal check for the same amount; or she could leave in handcuffs. The check was cut and I worked for them for another several months before I decided that the job really didn't work with my schedule, and I left. I found out several months later, that when it came time for that department to renew one of the grants that funded that department, that because of a verified wage and hour issue, that particular grant, and one other would be terminated, and the school would not be eligible to reapply for several years.
Not paying your employees can have serious consequences. This woman's boss needs to realize just how much trouble that you guys can get into for that sort of thing before she declares the issues "not major enough".