2410 Overpayments

The University of Pennsylvania is committed to making timely and accurate compensation payments to its employees. However, due to errors in processing, timeliness of submission, or reporting, an employee may occasionally be paid more or less than is owed. This policy outlines the procedures for resolving compensation overpayments. Employees, Managers, and school/center representatives have the responsibility to prevent and report any overpayment immediately, regardless of how the error occurred.  Each department is responsible for reviewing individual payroll amounts in order to ensure that they are accurate.

1. School/Center representatives are responsible for making timely and accurate compensation payments to employees subject to information provided by University departments and employees.

2. Managers are responsible for approving hours worked on the timesheet, and department administrators are responsible for reviewing payroll reports before and after each pay period to ensure there are no discrepancies in an employee’s pay.

3. Employees are responsible for reviewing their pay statements after each pay period to ensure there are no discrepancies in pay. Should an employee become aware of an overpayment, the employee is responsible for reporting it directly to their department administrator.

4. A department administrator who becomes aware of an overpayment must submit an overpayment form as soon as the error is discovered.

1. School/center representatives are responsible and required to process compensation changes in Workday prior to the submittal of an overpayment request. All employees, regardless of status, will be notified of an overpayment and will be notified of expected repayment terms.

2. All active employees must repay overpaid amounts. Payroll will provide employees with the Repayment Arrangement and Payroll Deduction Authorization form. Employees will indicate to Payroll how they wish to reimburse Penn for the overpayment.  Amounts to be recouped via payroll deduction in a one-time payment or in recurring payments cannot bring the employee’s gross wage below the federal minimum wage or below 50% of exempted employees’ net pay. If there is no response from the employee, the deduction will be decided upon using the University’s policy established by Central Human Resources, the Payroll Department, and the Office of General Counsel.

3. If an employee who has been overpaid is separating or being terminated, the amount of the overpayment shall be withheld from the employee’s final paycheck, which may include a payout of vacation and other vested paid time off balances. If the full amount is not recovered by such withholding, the University reserves the right to continue the recovery process, including external collections.

4. Failure to reimburse the University is grounds for termination.

5. Once the overpayment has been recovered in full, the employee’s year-to-date wage and tax will be adjusted, and the paying department will receive the corresponding credit.

6. 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.

7. 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.