Wage Overpayments - Prevention and Recovery

Patrick Haggerty is Keynote Speaker at ComplianceKey. He is a tax practitioner, author, and educator. His work experience includes non-profit organization management, banking, manufacturing accounting, and tax practice. He began teaching accounting at the college level in 1988. He is licensed as an Enrolled Agent by the U. S. Treasury to represent taxpayers at all administrative levels of the IRS and is a Certified Management Accountant. He has written numerous articles and a monthly question and answer column for payroll publications. In addition, he regularly develops and presents webinars a........


Recovering wage overpayments can be a time-consuming and sometimes challenging process for payroll professionals. State laws governing recovery of employer overpayment and adjustment of related taxes often vary from the federal rules and from state to state. Recovery may be difficult or cause hardship for employees, particularly in termination cases. Understanding your compliance obligations and responsibilities to your employees is critical.
Employment terminations will be discussed as an area of particular susceptibility to wage overpayments and how problems related to terminations can be minimized.
When errors do occur, it is important that employers follow appropriate procedures for making corrections and recovering overpaid amounts.
Recovery of an overpayment in the year the overpayment occurred will be distinguished from recovery in a subsequent calendar year. This includes recovery and repayment of overpaid taxes and the special problems with fringe benefits based on wages and corrections or amendments to payroll and wage reports such as Forms 941 and W-2.

Why should you attend this webinar?

Wage overpayments can be a source of significant cost in terms staff time spent in analysis and correction. Compliance issues and errors made during the correction process can add to the costs.
Accuracy is an essential element in the payroll deductions process, but error-free payrolls are rare. A survey by CyberShift and the American Payroll Association found that 20 percent of employers reported error rates of 1 to 5 percent of payments during typical payroll processing.
In the case of overpayments, employers must abide by federal and state wage and hour laws, and cannot simply deduct money from an employee's paycheck. In some cases, this could result in violation of minimum wage or overtime rules or the requirement to pay full salary to exempt employees. In a number of states, employers may not recover wage overpayments through payroll deduction without the consent of the employee.
Where an employee is not receptive to repayment, particularly in termination cases, the employer may have to resort to legal action or forego recovery.
Recovery of an overpayment may also create wage reporting, tax reporting and recordkeeping issues related to taxes and fringe benefits. Use of improper or illegal recovery methods may lead to imposition of fines, penalties, or other sanctions on an employer.

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Webinar Id: CIFPH011

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Duration: 90 mins

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