Mastering Payroll Overpayments: Step-by-Step Compliance With IRS, FLSA, and State Laws

Marketing and Empathy Psychology

By - Vicki M. Lambert, CPP

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Overview

Even the most efficient payroll departments encounter overpayments — and when they do, the consequences can be costly if not handled correctly. Whether due to human error, sign-on bonuses, unearned vacation payouts, or employee terminations, payroll overpayments trigger complex compliance obligations under IRS regulations, FLSA requirements, and state wage and hour laws.

This session will equip payroll, HR, and compliance professionals with the knowledge and practical steps needed to resolve overpayments correctly, minimize legal exposure, and stay compliant. You’ll gain clarity on what the IRS expects when correcting overpayments in the current or prior tax year, how FLSA rules govern repayment, and the often-overlooked state-level restrictions that can impact recovery efforts.

We’ll also explore real-world examples and best practices for handling overpayments while preserving compliance with federal and state wage laws — helping you avoid costly penalties, lawsuits, or tax liabilities.

Key Topics Covered

IRS & Federal Tax Compliance

Why a 1990 IRS Private Letter Ruling still governs overpayment corrections today
How to properly correct overpayments in the same tax year vs. a prior year
Why requesting the gross overpayment amount is preferable to the net
How to correct prior-year FICA, FUTA, and SUI taxes
Proper reporting using Form W-2 or W-2c

FLSA & Wage and Hour Considerations

Understanding the FLSA’s timeframes and limitations for recouping overpayments
When written repayment agreements are required under federal law
Impact of repayment on exempt status, salary basis, minimum wage, and overtime compliance
Handling advanced vacation payouts when an employee leaves
State-specific restrictions: notice requirements, time limits, and outright prohibitions

Who Should Attend

Payroll Executives, Managers, Administrators, and Practitioners
Human Resources Leaders and Professionals
Accounting and Finance Personnel
Business Owners, Executive Officers, and Operations Managers
Attorneys, Legal Counsel, and Compliance Specialists
Anyone involved in payroll processing or wage compliance

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Webinar Type

Clear

Speaker Detail

Vicki M. Lambert, CPP, is President and Academic Director of The Payroll Advisor™, a firm specializing in payroll education and training. The company’s website www.thepayrolladvisor.com offers a payroll news service, Payroll 24/7, which keeps payroll professionals up-to-date on the latest rules and regulations. With over 40 years of hands-on experience in all facets of payroll functions as well as over 30 years as an educator, training program developer, and author, Ms. Lambert has become the most sought-after and respected voice in the practice and management of payroll issues. She has conducted open market training seminars on payroll issues across the United States that have been attended by executives and professionals from some of the most prestigious firms in business today. A pioneer in electronic and online education, Ms. Lambert produces and presents payroll related audio seminars, webinars and webcasts for clients, APA chapters and business groups throughout the country. Ms. Lambert is an adjunct faculty member at Brandman University in Southern California and is the instructor for the American Payroll Association’s “PayTrain” online program also offered by Brandman University.