When there is a retroactive change to HRS or a terminated employee has overused leave, there is a very real likelihood that an overpayment has occurred. Several factors determine how the overpayment is repaid to UWM. Below is a general overview of overpayments at UWM and how they should be handled.
Active Employee Process
Same Pay Basis
- Payroll Reductions (negative paylines) can be taken from active jobs that are on the same pay basis that the overpayment occurred on. These are processed before taxes and pre-tax deductions. Standard payroll reductions are taken from as few checks as possible, one (1) being the default, however reductions can be taken from up to two (2) payrolls. Reductions spanning more than two (2) payroll periods will require permission from Payroll. A negative additional pay form from the division is required.
Different Pay Basis
- General Deductions are used when the employee’s active position(s) are on a different pay basis pay basis from what the overpayment occurred on. General deductions are after tax and are an amount determined by the Service Center via a check correction form Payroll must request. A negative additional pay form from the division is required.
- Payroll does not support long-term repayment plans.
- If an employee’s paycheck cannot support repayment or if the employee expresses a financial hardship, then the overpayment must be given over to Accounts Receivable for processing. Accounts Receivable will open an official collections and allow the employee to set up a repayment plan. This also ensures efficient repayment tracking.
Inactive Employee Process
Collections are used when the employee is termed or on an unpaid LOA for longer than one (1) payroll. Payroll must request a check correction for all paychecks paid incorrectly to determine the amount owed back to UWM. This takes into account all creditable taxes and deductions. A negative additional pay form from the division is required.
- Overpayments for terminated employees are given over to Accounts Receivable so an official collection can be opened. If payment is not received, Accounts Receivable has the ability to refer the balance owed to a collections agency for further action.
- If the terminated employee has the ability to write a single check for the full amount, they may do so in lieu of Payroll referring the overpayment to Accounts Receivable. This must be done so immediately. If the check is not received within a timely fashion, the overpayment will be given over to Accounts Receivable to ensure repayment.
- Employees on a short-term unpaid LOA may have their overpayment differed until they return to active status. Deferral may not be longer than one (1) payroll.
- Employees on an unpaid LOA lasting more than one (1) payroll must be given over to Accounts Receivable for processing. This will allow for efficient repayment tracking.
- It is the division’s responsibility to notify the employee of the overpayment when the overpayment is a direct result of divisional changes to appointment. If the employee is no longer active, Payroll will send further information in addition to divisional notification.
- General deductions and collections referred to Accounts Receivable require Payroll to request check corrections for every paycheck incorrectly paid. This will take into consideration any creditable deductions or taxes.
- For overpayments calculated off of check correction, Federal and state withholdings are creditable during the calendar year in which the overpayment occurred. Once past the current year repayment deadline (December 7th), federal and state taxes are then added to the amount the employee owes back to UWM.
- For overpayments calculated off of check correction, FICA taxes are creditable for three (3) calendar years. Once past the three-year deadline (December 7th, three years after overpayment occurred), FICA is then added to the amount the employee owes back to UWM.