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Handling Payroll Overpayments Correctly Under the FLSA (HRMO79Z)

Presented by: Vicki M. Lambert, CPP
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100 minutes
Event Description
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Understand Wage and Hour Laws and IRS Regulations that Affect Overpayments

Employees can be overpaid in even the most well managed payroll department. Overpayments can  happen when mistakes are made but aren’t always the result of an error; perhaps the employee received a sign-on bonus but did not stay for the required length of time, or the employee was provided advance vacation time but left before he or she has fully earned the time. No matter the reason, overpayments can and do happen and must be handled properly. The first questions that usually arise relate to IRS regulations. 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 compared to social security or Medicare taxes?

In this session, expert speaker Vicki Lambert will provide answers to all these questions and discuss these regulations and more including the private letter ruling that governs the IRS requirements. This session will discuss the issues that arise when an overpayment has been made. It will address the requirements that must be followed to help the payroll department establish a clear policy on handling overpayments that keep it in compliance with federal and state laws and regulations. You and your department will be prepared to handle overpayments compliantly and effectively.

However, recouping overpayments is much more complex than just adhering to IRS code! Wage and hour law compliance must also be honored when dealing with overpayments. Before the payroll department even needs to determine IRS requirements they must first determine if recouping the overpayment is even legal under the FLSA. Issues such as exempt employee status, minimum wage and overtime rules for nonexempt employees must be considered when recovering overpayments from employees. Vicki will examine the FLSA requirements on recouping overpayments including the 1998 opinion letter that spells out these requirements.

And of course, the overpayment did not occur in a vacuum when it comes to state laws. Each individual state may have their own compliance issues involving wage and hour laws! Is there a time limit for recouping the overpayment in that state? Does the employee have to be notified in advance before the deductions can begin? Or does the state just say NO to the whole process? Vicki will discuss how to conduct research to determine the state’s requirements for handling overpayments. She will review the wage and hour laws of several states and the factors that they use to determine if an overpayment can be recouped.


Session 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
    • Is a written agreement for repayment always required under the FLSA?
    • 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 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 | Payroll Training SpeakerVicki 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 and respecte... More info

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    Event Title: Handling Payroll Overpayments Correctly Under the FLSA
    Presenter(s): Vicki M. Lambert, CPP

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