How To Handle Payroll Overpayments & Payroll Record Retention in 2025?

Session # 1 - Payroll Overpayments: Handling them Correctly in 2025

Pre-recorded Webinar (get instantly)

Presenter - Vicki M. Lambert

Duration - 90 minutes

Employees can be overpaid in even the most well managed payroll department.  Yes, it does happen when mistakes are made but it isn’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 advanced vacation but is now terminating 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?  But what if it occurred in a previous tax year, does that change the rules?  Are the rules different for federal income tax than they are for social security or Medicare taxes?

Recouping overpayments is also much more complex than just adhering to IRS code! Wage and hour law compliance must also be honoured when dealing with overpayments. Before the payroll department even needs to determine IRS requirements they must first determine if recouping the over payment is even legal under the FLSA.  Issues such as exempt employee status, minimum wage and overtime rules for non-exempt employees must be considered when recovering overpayments from employees. 

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?   

Our expert speaker will discuss these regulations and more including the private letter ruling that governs the IRS requirements. We will examine the FLSA requirements on recouping overpayments including the 1998 opinion letter that spells out these requirements. We will also discuss how to conduct research to determine the state’s requirements for handling overpayments. We will review the wage and hour laws of several states and the factors that they use to determine if an overpayment can be recouped.

Webinar 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

Session # 2 - Payroll Records - 2025 Federal & State Regulations About What To Keep, In Which Format & For How Long?

Live Date - May 8, 2025

Time - 1 PM ET

Duration - 60 minutes

Presenter - Debbie Cash

Payroll is one thing that all businesses have in common.  Along with processing payroll comes many different payroll records required to process the payroll.  Each type of record has different requirements of how long you must retain those records. 

Payroll departments receive and submit hundreds of thousands of bits of data every year. Employee master file data such as name and social security number, employee forms such the Form W-4, report to the IRS such as Form 941, state unemployment insurance quarterly returns, termination dates for employees, and even child support withholding orders.

A critical question that every payroll professional must ask and more importantly answer is “What am I required to keep, in what format, and for how long”?  The time over which payroll records must be retained will depend upon government requirements.

The Internal Revenue Service typically states a required retention period in each document it issues dealing with payroll issues. In general, wage calculations should be retained for two years, while collective bargaining agreements should be retained for three years.

Webinar Objectives

Our expert speaker will go over the different types of documents that are considered payroll documents that must be maintained for a specific amount of time.  Some forms you might not consider as payroll documents actually are.

Many States have different rules than the Federal regulations regarding these documents.  I will touch on a few of these States and give guidance on how to find out more information about their regulations.

Each different type of document will be discussed in regard to how long you are required to keep the documents.  This will include timesheets, payroll changes, additions/deductions from Wages, State taxes and many more.

Webinar Agenda

• Types of Payroll Documents
• Retention of Documents
• Specific State Laws

Webinar Highlights

• To discuss the types of payroll records that must be retained.
• To analyze the requirements for each type of payroll record.
• To inspect for how long payroll records must be kept.
• To different State requirements for record retention.
• To discuss information and guidelines by specific states with different requirements.

Who Should Attend

Payroll Professionals, Small Business Owners, Bookkeepers, Managers, Tax Professionals, Payroll Executives/Managers/Administrators/Professionals/Practitioners/Entry Level Personnel, Human Resources Executives/Managers/Administrators, Accounting Personnel, Business Owners/Executive Officers/Operations and Departmental Managers, Lawmakers, Attorneys/Legal Professionals