To establish policy regarding salary and wage overpayment and to assign responsibility for identifying and remedying the overpayment.
May 2023Responsible Office
Each department is responsible for reviewing individual payroll amounts in order to ensure that they are accurate. If this review identifies individuals who have been overpaid, the following must happen:
It is the responsibility of the School/Center to run reports for the current pay period prior to the completion of payroll to ensure accurate payment to employees.
In the event an employee is overpaid in any given payroll period, the employee is responsible for bringing the overpayment to the attention of the departmental business administrator who must then notify the Payroll Department via the Request for Overpayment Calculation form found on the payroll website.
Upon receipt of the Request for Overpayment calculation worksheet, the Payroll Department will calculate the net overpayment that must be refunded to the University.
An email will be sent to the HR Analyst/Partner and the Employee notifying them of the net amount of the overpayment. It is also the Department’s responsibility to follow-up with the employee to ensure repayment of the net amount due to the University.
Included with the email to the Department and Employee is an authorization agreement that the employee must sign in the event that they select a Payroll Deduction. Electronic Payments or personal checks for the full amount of the overpayment are accepted as well.
If Employee elects for a Payroll deduction, they must submit a signed authorization form to the Payroll Department. Once the form is received, a Cash Recovery deduction will be set up that will withhold no more than 50% of the net pay from each of the employees’ subsequent pays until the overpayment is recovered in full.
Failure to reimburse the University is grounds for termination.
Once the overpayment has been recovered in full, the employee’s year to date earnings and taxes will be adjusted and the paying department will receive the corresponding credit.
Any overpayments not paid in full within the calendar year of the overpayment are considered “prior year overpayments”, and the employee will be responsible not only for the net amount of the overpayment, but the taxes that the University has paid on their behalf with the exception of FICA and Medicare. The overpayment amount will remain taxable in the year of the overpayment since the employee had access to the funds.
A Form W-2C will be processed for the FICA/Medicare adjustments only. For additional information related to tax filing, please consult a professional tax advisor, contact the IRS, or refer to Publication 525 – Taxable and Nontaxable Income – Repayments.