How to Process an Overpayment


Suggested Solution |  Steps | Additional Information


Problem

An employee has been overpaid. For example, an employee who is paid monthly overestimated time for the month and has actually worked less. This employee does not accrue vacation or sick leave so the department must reduce the time paid to the employee.

Suggested Solution

Process a correction on the EDLR screen to reduce (RX) the amount paid to this employee by reversing some of the time processed on the original transaction.

Steps

  1. Pull up the information on the transaction with the incorrect information. One source of information that can be used to see how the transaction was originally processed is the IPAY screen, IDER - Earnings Distributions.
  2. Complete the EDLR screen using the IDER screen as a source for most of the fields for the reversal (RX) transaction. Enter the difference in time worked in the time field. For example, if 100% time was originally reported and the employee actually worked 95% time, the adjustment would be processed to reduce the time by 5%. Note: If an LX transaction was also needed, use the Employee Database (EDB) as a source for the late pay (LX) transaction. If an incorrect rate was paid to an employee, the Payroll Time Reporting (PTR) preparer would complete the EDRA screen.
  3. Schedule the transaction for the appropriate payday. Note: Consult the current Personnel Payroll System (PPS) Schedule.
    1. Schedule the transaction for the employee's next normal payday if ALL of the following conditions are met:
      1. The overpayment is for a small amount.
      2. The employee agrees in advance to the reduction.
      3. The overpayment occurred within the current calendar year. OR 
    2. Schedule the transaction for two paydays in the future if the employee will be billed by Payroll Services.
  4. Add Payroll Services as an additional carbon copy recipient of the post-authorization notification (PAN) if the employee will be billed by Payroll Services.
  5. Review the transaction and update it.
  6. If the data were incorrect for more than one pay period, the updated transaction may be copied and then changed and updated again as many times as necessary to completely correct the problem.

Additional Information

  • More information on the EDLR screen is available in the PTR Manual, Section D5.
  • PTR Manual, Section E8 has additional information and instructions on overpayment processing.
  • Steps that Payroll Services takes upon receipt of an overpayment request:
    1. Payroll bypasses the transaction from the scheduled pay compute in order to process the overpayment manually.
    2. Payroll determines the amount of overpayment by calculating the amount of money the employee should have been paid. The employee owes the difference between the amount originally paid and the amount that should have been paid.
    3. Overpayment letter is written to the employee and sent with a copy of the recalculation information. Note: Payment is due and payable when the employee is notified of the overpayment.
    4. Department funds are credited for the gross amount of the overpayment.
    5. If the employee does not respond to the first overpayment notice, Payroll will write to the employee two more times to request repayment of the overpaid amount.
    6. After three attempts to get the employee to repay the amount owed, the overpayment is turned over to collections. At that point the amount that the University has been unable to recoup is journaled back to the Full Accounting Unit (FAU) originally charged or to an unrestricted department FAU.
    7. If the collection agency is successful, the payment collected, less agency fees, will be credited to the department.
  • In order for the employee's W-2 form to reflect the correct amount paid for the year, the overpayment must be repaid in the year received. See the latest newsletter on the overpayment deadlines for more information. Note: To access the newsletter archive, you must be a subscriber to the newsletter and have a password. More information is available on the Newsletter page.
  • Definitions of some common Payroll terms are in the PPS Glossary.
  • Example on EDLR Screen (PDF) shows a sample overpayment processed using the EDLR screen.
  • Example Without Repayment (PDF) outlines steps needed when an employee does not pay back the overpayment. 

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