Understanding Employee Overpayments in OSPA: Identification, Handling, and Guidelines

1. Employee Overpayments in OSPA Oregon Statewide Payroll Services March 11, 2010

2. Class Objective • Raise awareness of the following: • Identifying overpayments • Choices agencies have in handling overpayments • Calculating the overpayment • Repayment entries • When to request a Corrected W-2

3. Outline • Overall process • Net pay negatives • Year-end • Specific examples

4. What are some causes of overpayments?

5. How did you find them?

6. What Is Our Responsibility? • To make the Joint Payroll Account (JPA) whole • To make the agency whole • To accurately report and pay the employee’s wages and taxes

7. What Guidelines Do We Have? • OAM 45.50.00.PO and PR Collection of Overpayment • Collective Bargaining Agreements • Agency Policy and Business Practices • IRS and DOR Regulations • PEBB Rules and Guidelines

8. Overall Process • Research what happened • Determine gross pay received • Determine what employee should have received • Does CBA or OAM apply? • Notify the employee in writing • Agree on repayment plan and put in writing

9. Spreadsheet Available

10. Written Notice • Amount owed • Supporting documentation • Opportunity to respond within # days • If opportunity for monthly payments

11. Written Notice Cont’d • Explanation of what will happen if payment not received: • Automatic repayment plan • Account assigned to collection • Informed consent required to send debt to DOR Restricted Program • Employee’s signature to acknowledge and authorize deductions

12. Informed Consent • DOR Restricted Program requires use of SSN • Section 7, Privacy Act of 1974, 5 USC 552a requires: • Whether disclosure is voluntary or mandatory • By what statutory or other authority you are soliciting the SSN • How you will use the SSN

13. Informed Consent Cont’d • “Should I not repay the overpayment as agreed, I give my permission to release my SSN to the Oregon Department of Revenue. I understand that my action is voluntary and that the agency will only use my SSN for collection purposes under ORS 292.063 and ORS 293.250.”

14. Methods to Recover • OSPA automatically deduct from next pay • Single cash payment • Monthly repayment plan, either through OSPA or cash payment

15. Cash Payment • Agency may receive in any form acceptable to agency • For JPA, DAS, must be: • Money order • Cashier’s check • State warrant • Balanced transfer from R*STARS • Agency revolving fund check

16. Net Pay Negatives • Adjustments may create net pay negative • OSPS receives Net Pay Negative Report • Employee on report if not recovered in first month after becomes negative • 1st and 2nd month on report OSPS Accountant will contact agency • 3rd month on the report OSPS Manager will contact

17. Net Pay Negatives Cont’d • OAM 45.50.00.PR requires reimbursement to the JPA for net pay negatives • If agency reimburses the JPA, set up an account receivable outside OSPA

18. Overpayments at Year-end • IRS Publication 15 (Circular E) • Wages paid in error remain taxable to the employee until repaid • Employee received and had use of the funds • Employee does not amend the tax return, claims deduction in year repaid • OSPA Reference Manual, Recommended Practices, • Taxes, Corrected W-2 (W-2c) • Year-end

19. What questions do you have?

20. Examples for Class • Employee’s LWOP reported after run 1 • Employee received clothing allowance through both R*STARS and OSPA • Employee mistakenly received work-out-of-class (WOC) through the PPDB

21. Examples Cont’d • Employee compensated by SAIF and had full-time paid leave through OSPA • Employee has domestic partner insurance and no DPT on P050

22. Please remember to do survey in iLearnOregon • Next Forum – March 17, 2:00 to 4:00 pm, Mt. Mazama Rm, 1225 Ferry St. SE • April class – Employee Separations in OSPA