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what if it occurred in a previous tax year, does that change the rules? Are the rules different for federal income tax than they are for social security or Medicare taxes?

Recouping overpayments is also much more complex than just adhering to IRS code! Wage and hour law compliance must also be honored when dealing with overpayments. Before the payroll department even needs to determine IRS requirements they must first determine if recouping the over payment is even legal under the FLSA. Issues such as exempt employee status, minimum wage and overtime rules for nonexempt employees must be considered when recovering overpayments from employees.

And of course, the overpayment did not occur in a vacuum when it comes to state laws. Each individual state may have their own compliance issues involving wage and hour laws! Is there a time limit for recouping the overpayment in that state? Does the employee have to be notified in advance before the deductions can begin? Or does the state just say NO! to the whole process?

Course Key Concepts: Overpayments, payroll, recouping overpayments, wage and hour law, IRS tax law, handling overpayments.