i am at a loss.
December 2, 2009 2:53 PM   Subscribe

huge payroll issue. i'm lost and need direction. long story follows, but the short version is that i seem to have been overpaid by $15,000 and now my employer would like that money back.

between november 2008 and june 2009 i seem to have been overpaid a grand total of just under $15,000 by my company. they seem to have not noticed this until a couple of weeks ago, and i have very recently received a letter detailing how they will be garnishing 20% of my wages per paycheck until this matter is resolved (which will take 44 pay cycles, or nearly two years).

there are two pieces of payroll software in play here, which we will refer to as the frontend software (which i have access to) and the backend software (which i do not). these are not different facets of the same piece of software, they are actually two wholly seperate systems which pass information back and forth.

we submit time on a weekly basis, and are paid every two weeks. we are paid in advance of time worked (something i will go into more detail about later).

all of my time was reported correctly on the front end.

the backend seems to have wholly ignored the time i reported and simply assumed things which were not true about my schedule.

in this particular case, i was working a 4x10 schedule (4 ten hour days a week) with my three days off all being weekdays. during the problem weeks, the backend system assumed that i must've worked 8 hours on each of the weekdays that i had off, and recorded that time for me as if i had been working. since i already had a full 40 hours reported, it counted all 24 hours as OT along the way.

the backend software is supposed to auto-generate an email to my supervisor requiring manual approval for any pay period that contains overtime.

the backend system recorded that OT for me on 28 seperate weeks, but only generated and sent that email on two of those weeks. on those two weeks, my manager went in and manually corrected my time on the backend and my pacheck was, as a result, as it should be.

on the remaining 26 weeks payroll paid me for those phantom 24 OT hours.

i recognize that an obvious question is "how did you not notice this was happening?" and the answer to that is just that we were specifically told by management when we were hired that even when working a standard set of hours week after week, we could expect to see fluctuations in our paychecks and that this was perfectly normal and that payroll had a complicated system but they were on top of things. sadly, i trusted them.

we sumbit time well before the close of the work week (submission of your anticipated time is due on tuesday, the work week ends on saturday) for the time we anticipate we will be working/on vacation/etc. payroll records hours and cuts the paycheck before that pay cycle is completed, and then on the subsequent paycheck corrects anything that changed after your time was submitted via a "prior period adjustment".

(side note, an example for illustrative purposes - way back when i was hired, it was just a couple of days before the end of a pay cycle and i was paid for a full two weeks of work despite having been employed by the company for only a handful of days. on the next paycheck, i was paid a much smaller amount of money to correct the previous "overpayment", and then on the third and subsequent paycheck things equalized and started paying out more-or-less "properly").

this can lead to some situations where corrections are reflected on your paycheck weeks after you correct your previously-reported time in the system.

(if you have a sick day after your time for the second week in the pay cycle is submitted, you can go back and correct your submitted time once the next pay period starts, and then on the pay period after that there will be a "prior period adjustment" which corrects whatever needs to be corrected at the end of the next pay cycle. as a result, corrections can often take up to three weeks to actually take effect.)

when payroll finally realized what had been happening, they communicated this to my manager (who then communicated it to me). my manager and i went back to my paper copies of all of my paystubs to try and sort out exactly what had happened, and then we came to the sad realization that the "prior period adjustments" seem to have been made with no sense of continuity or standardization.

as a single example, on one pay stub in the middle of all of this i see i was given money back in a category ("differential") which doesn't appear on any other paycheck. it is not an applicable pay category for me, nor was money ever taken out of that pay category.

after having looked over all of the paystubs from the months in question, i realized that there were far more categories than i had anticipated seeing and so i made a spreadsheet with as much data as i could glean. all of the following categories appear somewhere in the stack, some often and some rarely and a couple of them even have unique instances.

basic wages
overtime wages
overtime premium
holiday
vacation
excused day
short sickness
pay adjustment
OT adjustment
differential

in some cases i see money both being added and subtracted in the same category as a "prior period adjustment" on a single pay stub. in other cases, i see dollar amounts seemingly move between categories over time (i.e., a particular amount added as a "prior period adjustment" in a particular category on one paycheck, and seemingly that exact same dollar amount removed as a "prior period adjustment" from an entirely different category on a subsequent paycheck).

the "prior period adjustments" also do not note the date for which prior period they are adjusting on my paystub. payroll, it seems, can view this data on the backend but there are no tools available to me to view this information.

earlier this week payroll sent me a letter which states that for the next 44 pay cycles, i will have a charge of $330ish (20% of my gross pay) removed from my paycheck to account for the OT, the OT premium, some vacation, and some regular pay - all of which they claim were overpaid to me during the course of the year. they would like me to sign this letter, have my manager sign this letter, and then return the letter to them. at that point, they will begin to begin to deduct the listed amount from each paycheck.

by the way, this letter is the first communication payroll has had directly with me about anything in this whole mess.

i attempted to get more information from payroll and i was sent a very sparce spreadsheet with an incomplete legend and no explanation for the data on it. i'm assuming i don't know what i'm supposed to be asking for from them.

my manager said to me that payroll had mentioned to her that i would need to file a tax adjustment for the previous year, and then most likely again for the current year after this whole thing gets sorted. i don't understand exactly what that means.

do i need to consult a CPA? a lawyer? what questions do i need to ask of payroll? what data should i be seeking from them? i don't even know if i'm asking the right questions.

i live in oklahoma (near tulsa), if that's relevant.

please help guide me. i can survive on 80% pay for the next two years, but it's going to be awfully tight living and all of my plans to save money are completely shot.

throwaway email, if it's helpful : payrollwoes@gmail.com
posted by radiosilents to Work & Money (26 answers total) 4 users marked this as a favorite
 
Response by poster: also, fwiw : this is a very, very large company.
posted by radiosilents at 2:54 PM on December 2, 2009


You should definitely talk to a CPA first, who will likely suggest you also speak with a lawyer. You can not trust this company to handle payroll in a way that makes sense. You do need to investigate what your rights are. I would not trust them to withhold the funds correctly, or that they are even withholding the correct amount, that they will remember to stop when it's time, or that they will handle your taxes appropriately. I have no idea what the laws might be in regard to this, but it seems pretty unfair.
posted by pazazygeek at 3:03 PM on December 2, 2009 [4 favorites]


Adding: You should talk to CPA because they will understand just how much tax drama this is going to cause you. Fluctuating income rates = confusingly fluctuating tax rates.
posted by pazazygeek at 3:04 PM on December 2, 2009 [2 favorites]


What pazazygeek said. You totally need help from a CPA, and if it were me I'd be talking to a lawyer too. $15,000 is no small amount.
posted by TooFewShoes at 3:12 PM on December 2, 2009 [1 favorite]


Your description of their payroll system made me go glossy-eyed after about the third paragraph. They need to be held accountable for this mess, and they need to show you pages and pages of detail that justify the proposed $330 deduction down to the last penny. No rounding, no fuzzy math, no guessing at how things happened.

I would take your letter to a lawyer at minimum before signing and ask the following:

- You're going to owe more income tax this year than is strictly fair, although the IRS won't see it that way, most likely. How are they going to help make sure the tax consequences for you are properly documented? Will the deduction make things balance out in the next year, or will that deduction be after-tax and thus screw you over for more in the end than you were overpaid?

- Is the company trying to charge you any kind of interest or penalty for the overpayment? Are they legally allowed to do so? I'd sure hope not.

- What happens if you leave the job before 44 pay cycles are up? Are you protected from additional penalty in that scenario?

- If they can't produce payroll data that makes sense and accounts for all actual time worked and how that differs from what you were paid for, do you owe them anything, legally? (ethically is another question)
posted by slow graffiti at 3:15 PM on December 2, 2009 [1 favorite]


This is pretty messed up, and OP needs at least a lawyer. Maybe an accountant, too. At the end of the day, the accounting may not actually be that complex.

Fluctuating income rates = confusingly fluctuating tax rates.

Huh? No. Simply put, the total income you receive in a year determines your marginal tax rate, which is then used to determine your total tax owed. Subtract the total amount withheld from this total tax owed, and that's how much you owe.

This may be complicated from a tax perspective, but only to the extent of needing to address the taxes you previously paid on your income which may now be (or may not be) subject to recovery by the employer.
posted by iknowizbirfmark at 3:16 PM on December 2, 2009 [1 favorite]


I don't think you need a CPA or lawyer YET. Do not sign anything. Tell them you need to see a detailed accounting that you can understand before you sign. Ask payroll to walk you through, step by step, what they overcharged per period and the explanation for how they are charging you now going forward. Also ask them to write out and show you what is going to happen tax wise and what will happen with your w-2s. If you cannot understand it or do not agree with it, then I would get someone versed in basic payroll accounting to sort through it for you. At the point you understand the math, then get a lawyer. At no time during the explanation process should you acknowledge liability for the debt, simply tell them you are trying to understand (not agree with) what they are claiming. You need to find out if they are going to give you a corrected or amended w-2 for the period in question or if they plan to adjust it on this coming w-2.
posted by JohnnyGunn at 3:32 PM on December 2, 2009 [3 favorites]


What pay rate were you promised, and did you get it? They have made an egregious error, and should bend over backward to help resolve it. However, if you were overpaid, you probably owe them the money. IANAL, etc. And, yes, you absolutely have to have a full understanding of the details.
posted by theora55 at 3:41 PM on December 2, 2009


Don't sign anything. Ask them to detail everything in writing. Record all communications with company. GET A LAWYER.
posted by Spurious at 3:45 PM on December 2, 2009 [2 favorites]


Remember: The company DOES NOT HAVE YOUR BEST INTERESTS AT HEART. Do not trust them.
posted by Spurious at 3:46 PM on December 2, 2009 [12 favorites]


Yes, lawyer up, but try to find an Oklahoma Employment lawyer as The World Famous suggests. It's pretty clear that the company is just trying to pencil whip this thinking that you'll just go along with it. They haven't considered your rights at all.

From the info you've given here, I think you'll be able to get a really good free consultation and with that a very clear idea of where you stand, what your rights are and what your next step should be.

I've only seen something like this happen once before and it had a good outcome. The employee did have to pay back all of the money but it was spread over a very long period of time.

Good luck and hang in there!
posted by snsranch at 4:05 PM on December 2, 2009


Get a lawyer. There are a couple of scenarios that could play out depending on how far back the pay errors go. Also, you should not have to pay back at a 20% rate.
posted by 2legit2quit at 4:22 PM on December 2, 2009


JohnnyGun has the right initial attitude. You absolutely should put the request for detailed documentation and a meeting in a very polite email. Cc your manager.

The problems here are many. $15,000 is A LOT of money. They made faulty initial calculations, who's to say $15,000 is correct now? They must document this fully for you now that they've brought the issue to your attention in writing. The documentation must be compared against your time sheets (you have those, right?)

Once the documentation is or is not acceptable...

A lawyer and CPA can help you negotiate the treacherous waters you are entering here. Your employer's reimbursement figures are not set in stone - personal back taxes owed, your legal/professional costs to verify their claim/mistake, the time you spend working on the issue (provided you're not already on company time during those hours) etc. etc. - these can be negotiated, I would think.

Key is proving you did not willfully cash checks beyond hours worked. CPA+Lawyer.

If there is negligence or an unreasonable reliance on software, you might have a case for damages (including the software manufacturer?? I don't know - spit ballling here.)

I am certain that your employer willingly adopted a complicated payroll scheme to mitigate how and when they pay employees. If you presented accurate time sheets, and the overage was a trickle here and a trickle there... a lawyer+cpa might eventually help you come to a reasonable conclusion with these folks.

Please. Don't pay for their mistake. If someone is penalized and/or loses their job over this, it should NOT be you.

Remain professional.

Good luck.
posted by jbenben at 4:27 PM on December 2, 2009


Talk to an Oklahoma employment lawyer right away.'

This employment lawyer concurs. The World Famous is world famous for a reason.
posted by Ironmouth at 4:38 PM on December 2, 2009 [4 favorites]


Please do what JohnnyGunn and jbenben say.
posted by milarepa at 4:39 PM on December 2, 2009


1- Yeah, don't pay for their mistake.

2- That said, it does sound like everyone admits there was a mistake, and everyone agrees that you got more money than you earned, and in theory, it should be corrected. You should pay what you owe them, but I'm not sure you really owe them $15,000. I would try to bargain for a better outcome than a 2 year -20% raise, however. Just spit-balling, perhaps some "overtime" hours to make it up quicker, or a "raise" to help shoulder the burden.

3- Didn't you notice that your paychecks were more than they were supposed to be? I mean, it sounds like they must have been something like 50% more.

4- Investigate the laws in your state- some or all of this might be illegal, and both you and them may have more to lose than gain by doing it this way. I mean, what's to stop them from laying you off and presenting you with a bill for $15,000? And what's to stop you from paying off the debt and marching right into your State Attorney General's office and filing for 20% back-wages? This deal seems perilous for both of you.

5- Not saying you HAVE to get a lawyer, but it could be beneficial. You don't want to turn this into an adversarial process, but you also want to protect yourself.

6- It sounds like they are going to file a "negative W2"- report to the IRS the screwup, and then you can file a corrected return and get back the extra taxes you paid. Which you would probably have to turn right around and send back to them because you will owe taxes on 100% of your wages going forward, but *may* not be paying the right amount.
posted by gjc at 4:44 PM on December 2, 2009


Get a lawyer first, not a CPA. Every lawyer has a favored CPA and you may be able to bundle your costs, or at least minimize them. Likewise, every CPA has a favored attorney, but that attorney may not specialize in employment law.
posted by 2legit2quit at 5:32 PM on December 2, 2009 [2 favorites]


You definitely will want to speak to an employment lawyer. There is a huge tax implication for you this year, and you definitely want to make sure that if you do owe the $15,000, that you aren't being taxed twice for this. Also, any good payroll department should be able to painstakingly recreate exactly what happened and explain it to you in layman's terms.
posted by Zophi at 6:33 PM on December 2, 2009


Going from a substantial overpayment to a 20% reduction is a significant hardship. They may be open to negotiation on this. Definitely talk to a lawyer.
posted by kindall at 6:57 PM on December 2, 2009


I'm surprised nobody has mentioned this yet, but since you're at the negotiating phase right now with the company, start mentioning that there's legitimate cause for them to reimburse you for legal fees that you incur trying to correct their errors. I'm not saying that that's entirely correct -- I'm sure that they'd counter with the fact that you should have noticed your paychecks being higher than they should have been, for example -- but right now, you should consider *everything* a negotiation and try to lessen the burden on yourself as much as you can. You can sure as hell believe that they're operating in this mode.
posted by delfuego at 7:10 PM on December 2, 2009 [2 favorites]


Please ignore all advice here that does not entail your discussion of this situation with an Oklahoma attorney posthaste. Do not pass go, do not sign anything.
posted by norm at 10:16 PM on December 2, 2009


I am going to join the echoing throng and urgently suggest you see an lawyer. One thing to keep in mind is this: lawyers who specialize in employment and/or accounting law will be particularly helpful to you in this case; there are a whole host of implications which your employer has just asked you to swallow whole, any or all of which could very well be completely false. I am no expert, but it seems as though financial situations like this rarely turn out to be black and white; the company clearly did make a huge goof on your payroll. But was that a goof worth fifteen large, or was it a goof worth something more like $500? A lawyer, who can act as an advocate, will be there to tell you when you need to man up and pay for it, and when you're not at fault and can fight certain charges; she will be able to ask for the right info from your company in the correct way, go over that info and identify what the expenses should really be, and negotiate something that's fair for you.

If this is a large company, you can bet someone with a certain amount of legal training who works for your company has glanced at the case already; it is 15 grand, after all. It's unsettling that they've just asked you to accept their side of things and sign a letter about it. A lawyer can recommend a CPA to you who can work through all of this with you, as well. Do you know any lawyers? If you do, ask them if they specialize in employment or accounting law, or know anybody who does. Lawyers can quite often recommend colleagues who specialize in different fields.
posted by koeselitz at 12:21 AM on December 3, 2009 [1 favorite]


If you don't understand how their sketchy spreadsheet means you owe them $15k, it's a fair bet that payroll doesn't understand it either, and has pulled this figure out of its computational arse. In other words: if they've screwed up your pay this badly already, what's stopping you believing they're not about to screw it up again, only this time with you on the losing end?

If I were in your shoes, I'd surely lawyer up, and not agree to any proposal or sign any document that the lawyer has not specifically advised me to.
posted by flabdablet at 2:51 AM on December 3, 2009 [1 favorite]


Employment lawyer in Texas (IANYEL) -- Please please go see an employment lawyer versed in both the Fair Labor Standards Act (FLSA) and the Oklahoma wage and hour statute. Surprisingly few companies are in compliance with the FLSA and you need to have someone who's familiar with wage + hour law to help protect your interests.
posted by seventyfour at 11:19 AM on December 3, 2009


If you don't understand how their sketchy spreadsheet means you owe them $15k, it's a fair bet that payroll doesn't understand it either, and has pulled this figure out of its computational arse. In other words: if they've screwed up your pay this badly already, what's stopping you believing they're not about to screw it up again, only this time with you on the losing end?
+1

I'm also not sure how you didn't realize they paid you so much more. And that if they really did pay you that much more, how come they trying to get back what was their money and cutting your salary, makes you next 22 months difficult to manage with what you will earn.

Also, +1 about making sure there are is no interest that you need to pay for their mistake.
posted by bbyboi at 12:03 AM on December 4, 2009


So, what is the verdict here?
posted by 2legit2quit at 8:42 PM on December 8, 2009


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