Ohhhh boy, the HR doo-doo is going to hit the fan

[hearts and roses]

I am 'basically' the Human Resource manager for my firm, which is comprised of 12 employees, in the insurance industry and we net well over a million dollars per year. We are categorized as a small company, but we work internationally with very well recognized companies all over the world.

So the other day, Friday - the day before everyone in my particular office (5 of us) went on vaca, I received a call from one of the staff in another office out of state. Seems that although she is working 48hours/pay period, she's been getting paid 80hours/pay period - since last October 2009. I guesstimate that she was overpaid by roughly $8500. She has offered to pay back initially $4100 and then pay off the balance.

There was a period last summer when we were in the process of hiring a new office manager for her office that she filled in and worked full time, but her hours changed October 1st and went from FT to PT - though those changes never took place with our payroll company.

And that is where I am at fault. I apparently never conveyed those changes in her salary to our bookkeeper who handles our payroll through a nationally known (very expensive) payroll firm.

Upon learning of this, I called our bookkeeper, presented the facts and asked her what happens next and also to not tell my boss until we know all the info we need. I want to present this to him next Monday when we all return to the office. I didn't want to tell him over the phone while he's on vaca and have him ask 8 million questions that I didn't have the answers to. By Monday I will have more info - I already have enough, but he's on vaca and I know it will just freak him out if I tell him over the phone. Plus, the employee wants to explain to him what happened in her life this past year herself.

What I have learned from the employee is that she has been in a state of flux for the past year, living on friends and family couches, sharing her checking account with her adult daughter and basically living out of her car. I knew she was experiencing difficulties, though I had no idea as to what extent. Anyway, when she saw the higher balances on her banking receipts, she thought nothing of it as she believed those funds to be her daughter's. She doesn't do on line banking and hasn't opened her pay stub or a bank statement since last summer!! Last week, she finally opened a pay stub and she said the floor fell out from under her - she was in shock and called me sobbing. She has about $4100 to pay back to the company initially, though she will have to pay the rest in installments. And she only work 24 hours/week, so how she will manage I have no idea.

But back to me and my culpability. I wish my boss was not away because I would go see him ASAP and explain everything to him. I am kind of freaking out a little bit because of my position as HR person, it would have been up to me to notify the bookkeeper of the salary change and I apparently did not. I do recall discussing the salary change, though it may have been with the employee, her manager in that office, or with the bookkeeper - I don't recall. I was going through my own stuff at that time, i.e., my mother's stuff, etc., and we were heading into the holiday season. Not making excuses, just saying. On top of that, I usually almost always, 99.9% of the time, state any changes like this in an email so I have the receipt and proof that I informed whoever. The last email I can find concerning this employee's salary change was the one stating she would be FT until a specified date (which was 5/31, but that changed when our then new manager quit so she had to stay on full time a little longer), but nothing about her going back to PT on October 1st.

I don't want to throw anyone under the bus and the employee wants to take 100% of the responsibility, but it's not sitting well with me. I am not in any position to pay any additional costs involved with rectifying the situation, however, I do feel that I am in part to blame for this mishap.

Our company will incur costs to rectify the payroll, taxes and W-2's at a cost of near $750.

Should I offer to pay that and let the employee just pay back what she was overpaid or should I take responsibility for the whole of it - the added costs as well as her overpayment? IOW, who is most culpable for this error - the company or the employee or is it split 50/50?

Anyone with accounting or payroll experience: You input is greatly appreciated! Thanks!

 

[Shari]

FWIW, I work for a software company (huge - international) and HR reported my FMLA time incorrectly and overpaid me over the course of a year. Even tho I did check my pay stubs and bank deposits, I never knew from one paycheck to the next how much they SHOULD be, so I had no way to actually verify they were correct. They identified the error, and I was in no part responsible for it. I had reported my time accurately to the appropriate people, but they, in turn, didn't report it to the payroll department correctly. But I was still the one to pay it back, in its entirety.

If that's the way it should be, I don't know. But that's what happened here.

 

[donna723]

I'm no payroll expert and I work for the State (or rather, I used to!) so how we would do it is probably irrelevant. But if someone was overpaid or received something they were not entitled to, the money would be deducted from their paychecks until it was all paid back. If it was a larger amount, it would be taken out as x-number of dollars per pay check until the entire amount was repayed. Of course, if she's already only working part-time, that wouldn't leave her much left.

Don't beat yourself up about it though. You may very well have told the bookkeeper to adjust her hours and just don't remember doing it! Just because you don't remember it, doesn't mean that it didn't happen! Personally, although I know there's people who are very lax about their financial affairs, I just can't imagine not looking at your pay stubs or your bank statements for that long! And didn't she notice the larger amount on her W-2 when she filed her taxes?

 

[hearts and roses]

And didn't she notice the larger amount on her W-2 when she filed her taxes?

She never filed her taxes for 2009 - she filed an extension. Ugh. I'm sick just thinking about what an idiot my boss will think I am, how inept.

 

[Shari]

And didn't she notice the larger amount on her W-2 when she filed her taxes?

Very good point, Donna.

And ultimately, you're responsible for what goes into your bank account. I think most companies make that pretty clear.

Being that she's willing to pay it back, and has a chunk of it TO pay back in a lump sum, I think you'd have to work for a real card for it to be a very ugly situation.

With regard to taxes, tho...will that really all have to be changed? I mean, even tho she wasn't SUPPOSED to be paid that much, she was, for that year...would that really need to be adjusted for? She still got all that money in that year...

 

[Josie]

This is just my opinion as a former manager of the accounting department. I was over the person who did the actual payroll and we had a personnel department who submitted the changes to us, which we then made.

I think the person who received the extra money should pay it all back. I don't think you should have to reimburse any of that. She should have opened her paychecks and seen the error before now. We probably did have similar problems where people got overpaid and they had to pay it back. It seems a little harsh to me now, but I don't even think we gave them a choice about how much to pay back each time.

I don't get how it is costing your company $750 to fix this, unless the payroll company is charging you to refile W-2's, etc. We filed our own so I have no idea how much that would be. I can tell you, we could have fixed this in not very much time, so if they are charging $750, that seems like a lot. Any additional taxes you might owe now, are taxes you would have paid if it had been done properly the first time, so that shouldn't count against you. If there is a penalty for underpayment, that would be your error that caused it. It has been 15 years since I have done this, so I might be missing something.

I would not have fired someone over a mistake like this, if they had been a good employee for a long time. Mistakes happen. I also would not have offered to pay back the $750 at my job, either, if I were the one who had made that mistake. In today's economy, at your company, maybe it is a different story.

Just my thoughts.

 

[Mamaof5]

The employee is responsible for not openning pay stubs and bank account statements not you. In your shoes I'd offer what it cost the company to correct the error and nothing more.

 

[flutterby]

I have a hard time believing that the employee didn't realize that her paycheck didn't change. She knew the amount when she was working full time, and it didn't change. I can't believe that she thought that her daughter was putting in the exact amount she was making when she was full time. Honestly, I think she should be losing her job. She was essentially stealing from the company.

I worked in payroll and in general accounting. The employee has to pay back the overpayment. It can be deducted (and should be) from her paycheck. I don't know what to say about the $750. I would feel culpable, too, and feel like that was my responsibility. I would probably offer and see what your boss says. I do know that we had a client who worked for a mortgage broker who failed to lock in a customer's interest rate and was forced to pay out of pocket the difference - in the thousands of dollars. But - the employee should have reported the overpayment, too, so ultimately I think she should be responsible for any expenses the company incurs because of this. If she hadn't reported the overpayment, she would be charged with theft (still could be) and would have to pay restitution.

Aren't hours turned in on a timesheet? Is it possible that the bookkeeper has some culpability, too?

I hate having to wait to address something like this, too. I screwed up at work big time once, and my boss was on vacation. It was a horrible weekend. Well, I've screwed up more than once, but that was the only time I had to wait to address it. Ugh.

 

[hearts and roses]

Thanks so much for all the feedback!

Hope, yes, we use an outside payroll company and our 2009 taxes, along with the 941/940 and her W-2, plus the last two quarters of payroll tax forms and the first 3 quarters of this year's payroll tax forms would all need to be amended, according to our accountant.

Honestly, I was just thinking that the employee could pay back the extra she received plus any extra taxes the company paid on her behalf, but the accountant's are watching their own behinds and don't want to end up in trouble, I'm sure.

Part of me feels that the employee should be responsible for not only what was overpaid but for any extra costs, because really, who doesn't look at a pay stub for a year? And at holiday time, I cannot see her not checking her stub to see if she received a bonus, Know what I mean??

And then the other part of me feels that back in October, if I had my head on right, I would have remembered to let the bookkeeper know to bring her down to PT hours. Which I may have done verbally, but there is no proof of that - everything in writing!

I am hoping that our accountant thinks on this until Monday and comes up with a better plan for our bookkeeper to handle it in-house rather than having to amend tax forms and work with the very expensive payroll company.

Thanks again~

 

[donna723]

To me, it sounds like when the amount of her paycheck didn't go down, she thought she was on to a good thing and let it go for a while, a little unexpected windfall. Then when the "windfall" started really mounting up, she got scared! That's probably why she hasn't filed her 2009 taxes yet! She sounds pretty flaky anyway ... I mean who is living out of their car, shares a checking account with their daughter, and has no idea how much her paychecks are! That doesn't make sense! And if you have a checking account, you have to know how much is going in to it so you know how much you can take out! And if she never looked at her account but was expecting the lower amount to be going in there, then the extra should still be there - but apparently she's taken it out and spent it ... or the daughter did. No way did she not know!

The way I see it, the company may have been at fault with the first paycheck that was for too many hours - she still should have paid the excess amount back. But after that, she should have noticed, she should have informed someone, and she didn't. I can't believe she didn't know! To me, it would be like if the bank accidentally deposited someone elses money in your account. That doesn't mean that it's yours to take out and spend!

It's sort of the same as what happened with my car insurance payment before I could access my checking account online. The money was to be deducted from my account monthly, and every month I deducted that amount from my checkbook. About three months later I noticed this extra money in my account, and looking back on my statements, I didn't see any deductions for car insurance. When I called the insurance agent, they checked and found out that, by mistake, they had been deducting my payments from their own office account instead of from my checking account! Thanks, folks! But since I had been deducting the money every month, it was still sitting there in my account and I just wrote them a check for it. This woman had to know that she had been spending more money every month than she was supposed to be making! She just needed the money so she didn't say anything for all this time. No way is that YOUR fault!

 

[Marguerite]

I'd say there was fault all round here.

Yes, you should have had something in writing over the change, to back you up. You will next time, I'm sure.

She MUST have checked her pay slips and her bank statements. We all know this. Yes, she is responsible for it going on for so long. And as for not putting in a tax return - she would be the beneficiary of the extra tax paid, so that has to go back too.

It sounds to me like she was in desperate financial state (as so many of us have been) and kept quiet for a while. But her conscience has got to her and she is 'fessing up in the only way she feels she can, and save face.

I wouldn't dump her in it, unless it becomes a case of her or you. But I would watch her pay more carefully in future. I wouldn't say she should lose her job, either - who knows what we would have done, if we were also in such desperate straits? Forgive, but not forget. And yes, the debt has to be repaid. At the very least, every extra cent she has got has to be paid back. Whether added costs should come out of her pay - I don't think so. Out of your pay? Again, I don't think so. Out of the external bookkeeping company - possibly. This is why they would carry insurance, for tis kind of mistake. But without that email you would have a hard time proving that you did tell them of the change.

As for you - 'fess up. But do make it clear tat you do recall talking about tis change perhaps to the bookkeeper. But you can't find an email that you sent to confirm it, and without that emali, it will be hard to prove whether the bookkeeper is responsible for the glitch going on, or you.

I don't think this is a job-losing situation, but the sooner you sort it out and then give your boss the full story, the better. If you present it with "This is how far we have now fixed it up: it will go some way towards negating your part in this.

As for this woman - we might suspect stuff, but we can't prove it. Give her a break. But don't trust her too much unless you're sure she's had a good scare.

I've had similar sorts of problems with an office I was helping manage at one stage. I was given some important computer disks and told the secretary to please post them to a certain person. I remember giving them to her, I remember writing down the address. I even remember what colour paper I wrote it on. But later on when the disks failed to arrive, the secretary claimed I never gave them to her. Valuable work went permanently missing and my name was mud, because I had no proof. I know the secretary remembered, but I'm certain she failed to post them as directed (she was lazy and had lost other stuff). It was early days for emails, which is why I didn't have an email record. besides, email files were being deleted by other office staff in the early days (also wrong - I stopped that when I realised, but we still got sabotaged by a board member who had the habit of writing vitriolic emails, then sending his wife in to delete all related files).

In the workplace, crud happens and people cover their own rear ends. Protect yourself and maybe watch some episodes of "The Apprentice". I was watching the British one last night (I believe it is the original - the guy is far more hard-nosed and far less a showman, than Donald Trump) and it showed how you have to defend yourself, but also not be too hasty about shafting others unless they deserve it. And also avoid deliberate sabotage of others. Not nice. not even in fun. An extra person got sacked because of it. Enlightening. I wish I'd seen this 20 years ago!

Marg

 

[Mattsmom277]

I think your boss will need to speak to this woman in depth to decide if she truly is just a innocent in all this with a ton on her plate, or if she exploited a situation.
However, if over the course of a year, more money was in my account every pay period, I'd for sure figure DOH its my pay being higher than it should be. Even if she
shared with her daughter, won't your boss be thinking : hmmm, so you and daughter share account. your pay and daughters pay go in, and you both just take what you want, when
you want without seeing who spends what, on what, and ensuring its only ones own pay being spent by each? I mean come on now. She may be in dire straights but something is not
right here. If you were living out of a car in a situation like that, you wouldn't be willy nilly with a joint account, when you'd need every penny for survival. I am certain your boss will
see right through that. It is bogus, pure and simple. Perhaps she's a very nice person who got in too deep and really wants to make it right. But thats between her and her boss.
As for your role. Here's what I think. You know you spoke to the bookkeeper, but in absence of email you are unsure if it was confirmed to bookkeeper, therefore you can't say for sure that you told them to change the salary rate. That is ALL I would say to my boss, along with a deep apology along the lines of: I've worked here for x amount of years and I continue to pride myself on being on the ball and not making mistakes like this. I'm very sorry for the problems this mistake has caused and just want to assure you that I will be double checking that everything in the future is confirmed in writing to avoid another mishap such as this.
And then I'd let my boss talk. I would NOT suggest for a second paying the $750. Companies write this off. Employees make mistakes. IF the boss hints, suggests or outright asks, I would very politely say something like "If that will help you feel that I have rectified this mistake to the best of my ability, I am perfectly fine with that".
If the boss even hints that you are responsable for the funds she recieved, not for one second would I settle for that. It is this employees responsability plain and simple. She should have (and likely was) aware that something wasn't right with her pay cheques.
Personally, I would fire this woman as the odds she truly wasnt' aware is not in her favor. Ok, so she says it was her pay and daughters going into account. Was daughter spending all that extra pay of hers that she didn't know she was getting? Because why would daughter htink its ok to spend that additional pay that belonged to the mother? She'd think she was stealing from her mother. The same mother who was couch hopping, basing life out of a car, starting to sound like a country song here!
I think she fell on hard times, and like someone else said, suddenly she was overpaid, needed it so kept it. Then it wasnt' fixed, needed it, kept it. Then it kept happening and she was scared. Now when she didn't file taxes, she knew she'd have to file soon meaning she was going to get caught. So she came forward all tearful at this "Sudden" realization that she was overpaid.
Unless your boss fell off a turnip truck yesterday, this story isn't going to jibe. Therefore, your mistake was that first paycheque going out at the higher amount. Every single penny beyond that was this employees responsability. Had she fixed it after the first pay, there would be no $750 worth of costs to correct paperwork. If I was your boss I wouldn't at all ask you for those costs. I would fire the employee and have them charged with theft, and also seek reinbursement along with the $750 plus any and all court costs.
I'm not heartless, I know people make mistakes especially in dire times in their lives. But this is a year long criminal venture and no part of me for a second believes her story.
I'm sorry about all of this stress you are having to cope with over this.

 

[witzend]

Part of the $750 may be that they have to deal with the IRS insofar as getting the company portion of the SSI and Medicare corrected and refunded. It wouldn't be so bad if it had gone on for a while, but over multiple quarters and multiple years is a bother.

As others have said, don't beat yourself up over it. If this is the only mistake you have ever made, while it's kind of a doozy, it's been recognized and rectified. It's not as though you ever looked at her pay stubs...

 

[Josie]

It seems like the main reason this is so expensive is that your company is using an outside payroll processing company. It is not that hard to make a few adjustments in the computer, probably one for every quarter, in the employee's pay, turning that extra pay into a receivable and reducing the tax liability. Then print out the new tax reports and file amended returns. Our reports showed everything we needed to put on the payroll tax forms. I did this 15 years ago so it might even be done electronically now.

The company's tax return would need a few changes in a few lines, but even then, the computer would figure it all out and someone will just fill in the numbers. It is a few hours of work. So part of the cost of using an outside company is paying more for corrections. It is just part of doing business with them.

Hopefully your boss will be as reasonable as I would be about this LOL.

 

[busywend]

In no way, shape or form should you bear the cost of rectifying this correction. It is part of buisness expenses and just comes with the territory, in my humble opinion of course.

The biggest problem with the situation is that the employee could leave before fully paying you back. Especially, if she forsees getting a reduction in pay - not to her real pay but even less. I think this is where the biggest potential loss is. Can she keep working full time now? At least that way she can pay back quicker.

I am not sure about the restating back through last year. It is possible they P&L will have to be restated so the correct tax implications can be known. It depends on if the company is profitable or not. However, it was an expense last year, it was paid out. Not sure you can justify reversing that since it was actually paid out. Now, reversing as the payments come back in from her makes sense.

 

[hearts and roses]

Wow, as I read through these responses I'm beginning to feel like real svcker! Lol

Thanks again for all the added input. Mattsmom, thank you for giving words so when I do speak with my boss I am neither taking all the blame nor shirking my responsibility in this matter.

You know I rarely open my paystubs but about every other month and I would totally notice high balances on my account and would have checked in with my daughter to see what she was depositing and using. All this input I've gotten has been making me look at the situation from other perspectives.

The $750 is what the payroll company will charge us to amend prior tax filing and the employee wants to pay all of that. If my boss buys her story, he will work with her. If not he may the manager down there to let her go, but I font think he would file charges against her or fire me.

Thanks again. Dying till Monday!!!!

 

[Marguerite]

The company will get more money back from this woman if she is NOT fired.

Marg

 

[ML]

I want you to know I'm thinking about you over the next few days until you can explain everything to the boss and release it from your psyche. Mistakes happen. You likely did bring this topic to the bookkeeper's attention on some level, so I agree that there is enough blame to go around. I do not feel you should be financially responsible in any way. I hope you will not beat up on yourself too much over the coming day. Hugs, ML

 

[donna723]

Yeah, Marg is right! If she stays employed, the money can be taken from her paychecks, even if it takes a while. If she's fired, you will probably never seen any of the money, even if they keep her last paychecks. There is very little hope of recovering any money from an unemployed woman who lives in her car!

 

[DaisyFace]

I guess I can't understand why there wasn't a double-check between "expected payroll expenses" and "actual payroll expenses"....

As employees were using vacation, sick days, staying late and other "normal" types of things that workers do during the course of the year....shouldn't there have been some sort of oversight? I cannot believe that every single employee of the company made the exact same dollar amount week after week after week after week....

Wasn't someone supposed to be keeping tabs on that? Which worker was on vacation? Which was on leave? Who called in sick? Whose hours were cut? Who worked extra?

How could this have gone on for so long without anyone catching it?