Wage Overpayments – Prevention and Recovery


April 03, 2017


Patrick A. Haggerty

  1:00 PM ET | 12:00 PM CT | 10:00 AM PT | 60 Minutes


Recovering wage overpayment is not easy. It is a time-consuming and often challenging process, both for payroll professionals, as well as employees. Learn critical information about wage overpayment to handle the issue well and to minimize chances of its occurrence, in this webinar.

Employees can be overpaid in even the most well managed payroll department. Yes it does happen when mistakes are made but it isn’t always the result of an error. The employee received a sign on bonus but did not stay for the required length of time. Or the employee was advanced vacation but is now being fired before he or she has fully earned the time. No matter the reason, overpayments can and do happen and must be handled properly. What is required if the overpayment occurred this year? what if it occurred in a previous tax year, does that change the rules? Are the rules different for federal income tax than they are for social security or Medicare taxes?

Patrick will discuss these regulations and more including the private letter ruling that governs the IRS requirements. And of course, the overpayment did not occur in a vacuum when it comes to state laws. Each state may have their own compliance issues involving wage and hour laws! What is the time limit for recouping the overpayment in that state? Is it necessary to inform the employee in advance before the deductions can begin? In this session, Patrick will discuss how to conduct research to determine the state’s requirements for handling overpayments. He will also review the wage and hour laws of different states and the factors that are used to determine if an overpayment can be recouped.

All webinar attendees will be provided handouts which will help them remember and make the most of the training they have received.

Training Highlights:

Handling Overpayments under IRS and State Tax Codes:

  • Why a 1990 IRS Private Letter Ruling on handling overpayments applies today
  • Correcting overpayments in the same calendar tax year
  • Why asking for the gross is better than the net check for prior year overpayments
  • Correcting FICA taxes for a prior year overpayment
  • Correcting FUTA/SUI taxes
  • Using Form W-2 or Form W-2c to report overpayments

Wage and Hour Laws and Their Impact on Recouping Overpayments:

  • The standards under the FLSA in terms of timeframe for recouping prior year overpayments
  • Collecting overpayments from exempt employees and its effect on salary basis compliance
  • Recouping overpayments and its effect on minimum wage and overtime requirements
  • Can employers treat advanced vacation payments as overpayments if an employee terminates
  • Where do the states stand on recouping overpayments?

Who will benefit:

The following people will benefit from, and should therefore attend, this webinar:

  • Payroll Supervisors, Consultants, Service Providers, and other personnel
  • Professionals responsible for overseeing Payroll and Tax Compliance
  • Employee Benefits Administrators
  • Audit and Compliance Personnel
  • Public Agency Managers
  • Public Accountants
  • Enrolled Agents
  • Risk Managers
  • Managers
  • Supervisors