Repaying an Overpayment
An overpayment occurs when an employee is paid for hours that they did not work or were paid at an incorrect rate. As a state agency, the University of Washington is required by law to recover these overpaid funds. A series of state and federal regulations governs the overpayment process. To comply with these regulations, an employee is required to notify their department immediately if they discover an overpayment on their paycheck.
Repayment for Current Employees
When an overpayment has been identified, the employee will need to sign the Overpayment Repayment Option Form that is provided by the departmental payroll coordinator.
There are three options available for current employees:
- Total Gross Repayment: Total amount overpaid deducted from one paycheck.
- Installment Plan: An installment plan of up to 12 pay periods, with a minimum $50.00 (or 1/12th of the gross overpayment, whichever is greater) installment amount.
- Annual Leave: Current Annual or Compensatory Leave may be applied towards the overpayment.
Repayment for Separated Employees
Employees who have separated or are on long-term leave must repay the University by check. This requires a repayment calculation to be done by the Payroll Office. The repayment amount is dependent on tax year information and may change if a tax year is crossed. An overpayment cannot be considered paid in full unless it is for the amount that has been calculated by the Payroll Office.
Collection Agency Accounts
Departments work with the Payroll Office to ensure repayment of overpayments using the appropriate method listed above. When an employee does not sign the Overpayment Repayment Option Form, the department will refer the overpayment over to the Payroll Office for further action.
An employee has 20 days to respond to the initial overpayment notice letter from their department. If no response is made to the initial notice a warning letter is sent at the end of the 20 day period.
If an overpaid employee does not respond to the warning letter, a second pre-collection letter will be sent.
Both letters will be sent from the Payroll Office via certified mail to the home address on file.
If all prior attempts to secure payment arrangements have failed, the overpayment will be placed with an outside collection agency. Employees placed for collection are charged a 17% collection fee (commission) by the collection agency in addition to the overpayment amount due. Once the overpayment has been turned over to the collection agency, the Payroll Office will no longer accept direct payments from the employee. The employee will need to communicate solely with the collection agency.
Rules and Regulations
IRS Publication 525 has information regarding salary overpayments and prior tax year.
Click a link below for the relevant section from the Revised Code of Washington.
Prevention