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FAQ: I overpaid an employee and the direct deposit file was already processed; how do I fix the overpayment?

If an employee was overpaid and the direct deposit file was already processed, complete one of the following most common ways to resolve this, depending on whether the employee will be getting paid again and the overpayment can be fixed in the next payroll, or if the overpayment must be fixed now and cannot wait for the next payroll.

If the overpayment must be fixed now (cannot wait for the next payroll), do the following:

  • Void the direct deposit stub using the Void Checks option.
  • Complete a payroll for just that one employee to calculate the check (direct deposit) correctly and update the check cycle.
    Note:  Do not transmit the direct deposit file to the bank.
  • Have the employee write a check to the school district for the net difference between the original check (with the overpayment) and the correct check.
  • Deposit the check from the employee into the school district’s bank account, but do not enter the check as a cash receipt in the computer, as the correct entries were already recorded with the voided and reissued direct deposit stub.

OR

If the employee will be getting paid again and the overpayment can be fixed in the next payroll, do the following:

  • If the employee is a unit employee, make an entry with the amount of the overpayment entered as a negative in Pay Period Entries.  Be sure to use the same expense accounts and cross references as originally used with the overpayment.
  • If the employee is a contract employee, edit the contract on the Wages screen in the Employee File so that it is correct; and then add a new contract entering the amount that was overpaid as a negative amount.  Be sure to use the same expense accounts and cross references on the new contract as originally used with the overpayment.
  • When calculating the next payroll, include the Pay Period Entries batch containing the negative entry if a unit employee, or verify both contracts are being included if a contract employee.

Note:  If a contract employee had a contract set up twice and was double-paid rather than just overpaid by a certain amount, click here to access the FAQ on fixing a double-payment.