Friday, February 23, 2024

How to Correct a Payroll Overpayment Steps and More

Explain some other changes which can take place as a result of this adjustment, like the fact that the employee could become exempt from the overtime wages. Natasha is a writer and former labor and employment attorney turned HR professional. Her experience as a litigator and HR trainer inspired her to begin writing about anti-discrimination laws in the workplace. As a writer at Eddy HR, she hopes to provide helpful information to both employees and HR professionals who need help navigating the vast world of human resources. When she’s not writing, you might find her cheering on the Green Bay Packers or hiking in the Northwoods of Wisconsin. The last step is to make the change either manually or in your payroll software.

  • Staying on top of wage and hour and other employment-related laws is an important part of payroll compliance.
  • Keeping precise records can also protect employers and employees, providing documentation to help prevent legal issues and resolve conflicts.
  • When you adjust an employee’s wages, the employee might go from exempt to nonexempt, or vice versa.
  • Such information are required to be given to records keeping purposes.
  • The HR team needs to monitor who’ll receive the increase applies and ensure the new salary appears in their payslip.

Meanwhile, the standard deduction for married couples filing joint returns has increased to $29,200 — a $1,500 bump from 2023. Overtime can be irregular, which is why it is often an easy oversight. Payroll records are a combination of the documents businesses must keep for each individual they employ.


It’s vital to record the exact date the contract terminates to adjust the final payslip. Any updates to employee contracts, such as a salary increase, must also be reflected in their payslip. The HR team needs to monitor who’ll receive the increase applies and ensure the new salary appears in their payslip. Eddy is the all-in-one HR Suite built top 5 best software for law firm accounting and bookkeeping to help local businesses easily manage their people, payroll, and hiring processes. For payroll software that adjusts payroll easily, explore Hourly today. Whichever way you choose, let the employee know how much will be adjusted, when it’s going to happen, whether the change is temporary or permanent, and why you are adjusting their pay.

Negotiate a plan that works for you and the employee, such as deducting a certain amount each paycheck. Make sure the final plan is in writing, and get the employee’s signature. In the USA, payroll and tax aren’t something than can be interpreted. Any pay missed during changes to a shift pattern, where an employee isn’t fully compensated, can create a shortfall. When shift patterns become irregular, like overtime pay, bonuses, or missed or extra hours, there is often a shortfall in pay, which will need to be owed retroactively. Should you make any changes that breach this contract, you could face serious legal consequences.

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If a change isn’t captured in a payroll period, this will create the shortfall. Modern payroll software leverages payroll automation to reduce the need for human intervention in payroll, including the management of payroll changes. Even for employees who earn a fixed salary, the payment amount detailed on the payslip may change from time to time. Whenever an employee is paid more (or less) than their usual earnings, a payroll adjustment is needed.

Step 5: Adjust Payroll, Including Deductions

Most of these are done for employment tax purposes and deductions from government benefits provided to the employees. Sometimes, payroll adjustments are made by employers due to special reasons such as rewarding an employee for exemplary work or penalizing for infractions made by an employee. A payroll adjustment (also called pay adjustment) is a temporary or permanent increase or decrease of an employee’s pay. Information regarding pay adjustments are typically collected and administered by the HR team. The HR team is also responsible for passing the information on to the payroll team so that they can implement the salary changes before the next payroll run.

Executive Exemption

The maximum Social Security benefit for those retiring at age 70 in 2024 will jump $318 to $4,873. That figure is up by nearly $1,000 in just the past three years, showing just how extreme inflation has been during that span of time. Those who retire in 2024 and qualify for the maximum benefit will receive more in their monthly Social Security than their peers who retired in 2023.

Refer to section 2 of Publication 15 for more information about section 3509. You must also follow the rules for determining between exempt and nonexempt employees. You must pay overtime wages to nonexempt employees, but you do not have to give overtime wages to exempt employees.

Social Security facts you should know in 2024

For example, you can’t reduce an employee’s pay because they had jury duty, and in many states, you have to provide paid time off for voting. Pay adjustments can be made to accommodate changes in an employee’s duties, such as increased responsibilities, hours, or job difficulty. These types of pay adjustments are sometimes paired with a job title change. A pay adjustment is an increase or decrease in an employee’s salary or wage.

Learn more about the four reasons you should consider making a change. Once you know what the pay adjustment will be, you’ll want to communicate the adjustment to relevant leadership and supervisors. It’s extremely important that supervisors are aware of the nature of the pay adjustment, the amount, and the reason. This is particularly the case if the pay adjustment is a decrease, since the employee may become upset upon learning of the decrease. Whether you’re making promotions, trying to retain an employee, or going through budget cuts, you may need to adjust compensation in your company.

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