Overview

Even the most efficient payroll departments encounter overpayments — and when they do, the consequences can be costly if not handled correctly. Whether due to human error, sign-on bonuses, unearned vacation payouts, or employee terminations, payroll overpayments trigger complex compliance obligations under IRS regulations, FLSA requirements, and state wage and hour laws.

This session will equip payroll, HR, and compliance professionals with the knowledge and practical steps needed to resolve overpayments correctly, minimize legal exposure, and stay compliant.

You’ll gain clarity on what the IRS expects when correcting overpayments in the current or prior tax year, how FLSA rules govern repayment, and the often-overlooked state-level restrictions that can impact recovery efforts.

We’ll also explore real-world examples and best practices for handling overpayments while preserving compliance with federal and state wage laws — helping you avoid costly penalties, lawsuits, or tax liabilities.

Key Topics Covered

IRS & Federal Tax Compliance

• Why a 1990 IRS Private Letter Ruling still governs overpayment corrections today
• How to properly correct overpayments in the same tax year vs. a prior year
• Why requesting the gross overpayment amount is preferable to the net
• How to correct prior-year FICA, FUTA, and SUI taxes
• Proper reporting using Form W-2 or W-2c

FLSA & Wage and Hour Considerations

• Understanding the FLSA’s timeframes and limitations for recouping overpayments
• When written repayment agreements are required under federal law
• Impact of repayment on exempt status, salary basis, minimum wage, and overtime compliance
• Handling advanced vacation payouts when an employee leaves
• State-specific restrictions: notice requirements, time limits, and outright prohibitions

Who Should Attend

• Payroll Executives, Managers, Administrators, and Practitioners
• Human Resources Leaders and Professionals
• Accounting and Finance Personnel
• Business Owners, Executive Officers, and Operations Managers
• Attorneys, Legal Counsel, and Compliance Specialists
• Anyone involved in payroll processing or wage compliance