Missouri State University

Salary Overpayments

Salary Overpayments

1) If an employee is overpaid and the error is discovered in the current year, payroll will work with the employee to recover 100% of the overpayment within the current year. 

Choices include:

* The Payroll department can reverse the incorrect payment from the employee's bank account and substitute the correct amount if it is found within 3 banking days of the error.
* The total net amount of the original payroll can be repaid by the employee by check and if the error was a portion of the original payroll event, the corrected net amount can be sent to the employee’s bank account. 
Payroll can’t accept partial repayments as entire payroll entries must be voided and replaced with the correct amount of pay
* Salary reduction of the gross amount can be taken from the employee’s next check or checks (no more than 3 payroll cycles) as long as the entire amount is paid back by December 31.

2) If an employee is overpaid and the error is discovered in a subsequent year, the department(s) will have the responsibility for recovering the gross overpayment from the employee.  (The overpayment will not be put onto the employee’s accounts receivable account.)  When/if the overpayment is received, the department(s) will deposit the funds as a contra-expense against the labor account originally charged.  Partial payments should be deposited when received.  The department will notify Payroll when the entire amount is collected and provide copies of the Money Received Form(s).  Payroll will then process the proper IRS forms to recoup the Social Security tax amounts previously withheld on these wages and paid by MSU.  The Social Security taxes will be refunded to the employee.