How do I fix an overpayment to an employee?

Employees can get overpaid for a variety of reasons. When it happens, there are several basic options for getting the money back:

  1. Have the employee write a check back to the company (easiest option)
  2. Deduct the overpayment from the employee's next check
  3. Create an ACH reversal from the employee's bank account (this is the last option if all other options aren't possible)

If you are going to pursue an ACH reversal/direct deposit correction, please contact DP Customer Service for assistance.

* Please note that if there are Non-Sufficient Fund Fees, these fees will go to the Client.

The first step in correcting the overpayment is accurately determining how much the employee was overpaid, which can get complicated because of the tax rate adjustments. The most accurate way to calculate the difference and record the correction in payroll is to void the original transaction entirely and add a new check reflecting what should have happened.

Here's a step-by-step:

  1. In Payroll Processing > Payroll Entry > Individual Time Entry, then select the employee you wish to correct.  
  2. To void the original check, click "Add New" in the horizontal blue bar that runs across the middle of the screen, then choose Check Type: "Void", select the original check you wish to void, uncheck "Include Direct Deposit Reversals", and Save. (voiding does nothing but act like this check never happened and corrects tax information in isolved)
  3. To calculate the amount the employee would have received on a correct version of the check, click "Add New" again.
  4. Choose "Additional Check" from the drop-down menu, and Save.


     5. Enter the employee's earnings and hours as they should have been, then click "Preview Check" in the horizontal black bar.




   6. Once you're satisfied that the information is correct, hit "Post as Manual" to save the calculation as an adjustment. (This does not pay the employee. Much like the voided check this is simply to correct the employee's tax information)

Once you have calculated the corrected check, you can subtract the corrected net pay from the original net pay the employee received. That amount is what the employee owes.

At this point, you can either have the employee write a check back to the company or deduct the difference in pay on the next scheduled payroll. If you are going to deduct it on the next payroll, the simplest thing to do is to put the amount in Individual Time Entry as a post-tax deduction (such as Miscellaneous). Contact DP Customer Service if you need assistance or a recommendation!

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