Employers that accidentally overpay employees must consider possible legal restrictions to recovering overpayments and how repayments will affect employment taxes, two payroll experts said May 8.
“Doing nothing at all is the easiest [solution], yet completely compliant,” said Gretchen Inouye, Payroll Manager for The Smith Center for the Performing Arts. The overpayment amount is simply treated as regular wages for tax purposes. “If we overpay an employee, there is absolutely no legal obligation for us to get the money back.”
However, if an employer decides to recover the amount of the overpayment, it must consider the laws of the employee’s ...
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