Reimbursing My Former Employer for Overpayment

[mbarrington]

My company issued an extra paycheck to me in error after I retired (not my fault), and subsequently sent me a letter requesting that I return the gross amount of the overpayment. I think it is reasonable for me to return the net amount that I received, but not all of the deductions.

The gross amount includes amounts that were paid to other entities. Payments were paid to Medicare and the Social Security Administration, which I don't believe will be reimbursed to me. Also, payments were made to my former employers' medical/dental/vision insurance provider, supplemental life insurance provider, and for short term disability, for which I was no longer eligible because my employment ended. In addition, federal and state taxes were deducted and I will not get reimbursed for them until I file my tax return next year.

I called the company to ask how they would correct the situation. Their response was that they would adjust my W-2 form after I repaid the gross amount. I explained that I don't believe that will correct the situation entirely. The person I spoke to said she would not argue with me, their policy is that I repay the gross amount.

What should I do next?

 

[cbg]

Was this extra check issued to you in calendar 2008, or was it previous to that?

There's a reason I'm asking.

 

[mbarrington]

The extra check was issued in 2008, in August.

 

[cbg]

Okay, I'm going to have to talk to one of my friends in Payroll and get the rules, but I know it makes a difference if you are paying the check back in the same calendar year you receive it. She'll know the details (I don't work in Payroll so I'm not up on this) but there are Federal regulations that determine how this should go.

It might be a day or so before I can reach her because she just had a death in the family, but if no one else knows it I'm sure I can get you an answer by next week.

 

[presutin]

You have to pay the net and the company has to reverse the taxes so it all pans out in the same calendar year. Hope this helps!

 

[mbarrington]

Thank you. I appreciate you checking further. I don't believe that paying the net amount will produce correct results because the company insists that I have to pay the gross amount.

 

[presutin]

That is because they don't want to deal with the trouble of having to reverse the tax and deductions taken out of your paycheck. Not suprising...

 

[mbarrington]

I still don't know what to do next. If I pay back the net that I received, I don't believe the company will reduce my earnings by the gross amount. So that will not resolve the issue. Do I have any other recourse?

 

[presutin]

Then the only recourse for you will be, when you receive your W-2, to make sure the amount is correct, otherwise, dispute any errors.