Salary Payback Calculation

MOOCOWS

Our company allows employees to use PTO that has not yet been actually earned (I know we are crazy!). We clearly state in our policies that if an employee leaves employment and has gone to the "negative", they need to pay the company back (we deduct from their final paycheck). On several occasions, there has been no final paycheck to make this payback to the company. Thus, we simply send out a letter and request a payback. My question is how to correctly calculate the appropriate amount they owe back? (The whole tax issue...) We have supplied this question to our Accountant, but she is slow to respond.

I am happy for any guidance on this one.

Theresa Gegen TX

Here is the easiest way to solve your problem -- don't let employees go in the red on PTO.

Most states won't allow you to take money out of the employee's final paycheck, even if it is owed, unless the employee signs an agreement allowing you to take it. (Believe me, I know of an employer who loan 2K to an employee and took $50 a week out of paycheck. Employee then got fired. Employee filed wage claim based on the deduction. Employee told the agency that he owed the money to the employer, but did not agree that it could be taken out of paycheck. Employer was then ordered to pay it back to the employee!!). Maybe you haven't had this come up yet, but I could see it happening.

Good Luck!

MOOCOWS

The practice is not healthy, I know that. We will be getting rid of this policy (a great benefit for the employees, but a risk for us). The employee has signed in agreement with the terms of the policy, however, the assistance I am looking for at this point is how to calculate the correct payback amount.

Down_the_Middle

I must not be getting the full point, but it seems to me the calculation and the corresponding amount of payback should equal the amount of overpayment. At the risk of being trite, whatever you paid the employee s/b re-paid to zero out the account. Oh.....and btw, I'd recommend d/c'ng this practice ASAP.

Theresa Gegen TX

I can see that that problem is that the employer has already taken out withholding (FICA, social security and tax) on the amount paid. So that will all have to be corrected. Also, the final W4 form will have to reflect the true amount paid to the employee, less the amount the employee paid back.

It seems to me that the employee should not be required to pay back more than the employee actually recieved in hand.


Good Luck!

Pork

MOOCOWS: OINK, OINK YOU CATTLEMEN ARE CRAZY FOR GIVING AWAY SOMETHING YOU DON'T HAVE. By the way give me your e-mail address and I can provide you with the perfect solution for identifying MADCOW DIEASE. Now, to do what you crazy guys have done you should have your benefit outlined as a ADVANCED WEEKS PAY. Have then acknowledge that they have or are receiving pay in advance for work to be recorded. Then when you are collecting back you are collecting back "pay in advance" for certain number of 40 hour segments. If you have not gotten your pay back by the time the individual is gone you are probably _OL. Getting blood from a turnip is hard to do! Being a loan company when you are not is not avery good idea, but then good employees seem to also get into trouble and need our assistance. They must also keep the program solid for the other good employees otherwise it hurts every one. I do not recommend you toss out the baby with the wash tub! Just the dirty water. Pork