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Handling Payroll Overpayments Correctly in 2016 (HRM663B)

Presented By : Vicki M. Lambert , CPP
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Pre Recorded Webinar
90 minutes
  •  Thu, June 2, 2016
Event Description
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1.5 Credits
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Handle Payroll Overpayments in Compliance with FLSA and IRS Requirements

Even in a well-managed payroll department, there are chances of employees getting overpaid. Yes it could happen when mistakes are made; however, it is not always the outcome of an error. Maybe the employee got a sign-on bonus but had not stayed till the required time period. Perhaps the employee was advanced vacation but is now terminating before she or he has fully earned it. Whatever might be the reason, overpayments can and does happen and it should be handled carefully.

The immediate questions that arise are concerned to IRS regulations. What needs to be done if the overpayment occurred in the present year? However, if it had happened in the previous tax year—do the rules change? Do the rules differ for federal income tax than they are for Medicare or social security taxes? These regulations and more including the private ruling that governs the IRS requirements will be discussed in this session by our expert speaker Vicki M. Lambert, CPP.

Although, recovering overpayments is more complex process than just adhering to IRS code. You need to honor the wage and hour law compliance while engaging with overpayments. The payroll department should first examine whether recouping the over payment is legal under the FLSA prior to the payroll department determining the IRS requirements. There are many issues that must be considered while recovering overpayments from employees, such as overtime rules for nonexempt employees, exempt employee status and minimum wage. Vicki will analyze the FLSA requirements on recovering payments including the 1998 opinion letter that spells out the requirements.

Also, when it comes to state laws, the overpayment did not happen in a vacuum. Every state might have their own compliance issues involving wage and hour laws. What, if at all, is the duration for recovering the overpayment in that state? Do you need to notify the employees in advance prior to starting the deductions? Or will the state disallow the entire process? Vicki will discuss how to conduct a research to ascertain the state’s requirements for handling overpayments. She will review the wage and hour laws of various states and the factors that they use to ascertain whether an overpayment can be recovered.

Therefore the billion dollar question is – Are you and your department prepared to handle overpayments effectively and compliantly?

In this session, there will be discussion on the issues that arise when an overpayment has been made. Vicki will address the requirements that should be followed to help payroll department in establishing a proper policy on ways to handle overpayments in compliance with state and federal laws and regulation.

Session Highlights:

Handling Overpayments under IRS and State Tax Codes:

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

Wage and Hour Laws and Their Impact on Recouping Overpayments:

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

Who Should Attend

  • Payroll professionals
  • Human Resources
  • Accounting Personnel
  • Business Owners
  • Lawmakers
  • Attorneys
  • Any individual or entity responsible for correcting overpayments made to employees
About Our Speaker(s)

Vicki M. Lambert, Hr Training Programs ExpertVicki M. Lambert CPP
Vicki M. Lambert, CPP is President and Academic Director of The Payroll Advisor™ a firm specializing in the training of payroll professionals.  With over three decades of hands-on experience in all facets of payroll functions as well as over 20 years as a trainer and author, Ms. Lambert is a sought-after ... More info

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    Event Title: Handling Payroll Overpayments Correctly in 2016
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