All wage or salary overpayments must be promptly reported to the Payroll Office in Accounting and Fiscal Services. If you are an employee and have received an overpayment, you should immediately notify your department's payroll coordinator, who will work with Payroll to setup repayment. Departments are not authorized to overlook or forgive any overpayment. Amounts owed to the University (overpayments from prior periods) require written approval from the employee prior to recovery.
Salary overpayments can result from errors in gross or net salary. Examples of gross salary overpayments include payment of overtime to the wrong employee, miscalculation of overtime, and incorrect pay rates. Net salary errors may also occur when a required deduction (such as a health or parking deduction) is not taken.
The University does not have the authority to write-off or forgive a salary overpayment until all efforts to collect the debt have been exhausted.
An employee who discovers that he/she has received an overpayment of wages/salary must immediately notify his or her department. Once the employee has received a University of California, Irvine, Repayment Agreement and an overpayment calculation schedule, he/she has to sign and return the Agreement to their department or to communicate the specific reason why the form has not been signed. In the event of a final paycheck, the full amount of the overpayment, up to the total amount of the final paycheck, may be deducted.
When an overpayment is paid back in the same year, the employee’s repayment will be reflected in his or her IRS Form W-2 Wage and Tax Statement.
If an overpayment is paid back in a subsequent year, however, the employee’s W-2 for the year of overpayment will not reflect their repayment. The employee would have to claim their repayment as a miscellaneous deduction on their individual income tax return. Because of the strict rules provided by the Internal Revenue Service regarding how to handle the repayment of wages, individuals may not necessarily recover the additional tax liability from the previous year related to the overpayment. Therefore, it is imperative that an employee ensures that the payments they are receiving are correct and any overpayments are paid back in the same year.
Departments who discovers an overpayment or receives notice of an overpayment must immediately notify Payroll Services. The departmental contact is responsible for notifying the employee of the overpayment and making sure they receive and understand the University of California, Irvine, Repayment Agreement. Once the Repayment Agreement is signed by the employee and a department representative, the form is returned to the Payroll Department.
Payroll Department Responsibilities
It is the responsibility of Payroll Services to make timely and accurate wage/salary payments to university employees based upon information provided by university departments and in accordance with applicable state and federal laws. When overpayments are identified, it is the responsibility of Payroll Services to provide the departments a University of California, Irvine Repayment Agreement and an overpayment calculation schedule to provide to the employee. If a Repayment Agreement has not been received, collection activity needs to be considered.