Employee was notified she was non-exempt and has been working overtime for past 2 years and not turning it in. What is the statue of limitation on paying overtime, and what taxing method is used?

Hello C:

I'm not sure I understand your question. On the one hand it looks like you want to pay this employee... On the other, it looks like you're trying to beat them.

Every payday that you didn't pay the person what you owed them starts NEW statute of limitations tolling. Not knowing your state, it would be my guess that payments over a year old would fall outside the statute...

But, why would you pay them for a years worth of overtime, and NOT the previous year - EVEN if you legally can get away with it?? Don't you VALUE this employee?? If you cheat them, they'll quit, of course, and tell others about it. It's NOT going to do you a whole lot of good...

But, different people run their business's different than I would.

excon

Hello C:

I'm not sure I understand your question. On the one hand it looks like you want to pay this employee... On the other, it looks like you're trying to beat them.

Each and every payday that you didn't pay the person what you owed them starts NEW statute of limitations tolling. Not knowing your state, it would be my guess that payments over a year old would fall outside the statute...

But, why would you pay them for a years worth of overtime, and NOT the previous year - EVEN if you legally can get away with it??? Don't you VALUE this employee???? If you cheat them, they'll quit, of course, and tell others about it. It's NOT going to do you a whole lot of good....

But, different people run their business's different than I would.

excon
excon, I work in payroll and I was not aware that she was working overtime until today when she asked if she was overtime eligible. I looked up her job description and found out that she is OT eligible. I am in the state of PA and we do want to make her whole. I thought the statue was more than a year. I will follow up with DOL

Thank you for your comments

I am in the state of PA and we do want to make her whole. I thought the statue was more than a year. Hello again, C:

I'm still getting conflicting messages from you. If you want to make her whole, then the SOL isn't going to apply, even if it COULD.

In terms of HOW to tax her, give her one big lump sum payment and deduct her normal percentages. If you're off a little bit, she'll get it straight when she files, and you will too when you fill out your quarterly 941.

excon

ChevyGal,

Don't you just love it when payroll gets these kind of things. I wonder if the overtime was approved, then again that is an HR issue. If I were your HR I would talk to this employee about approved and unapproved overtime.

I would also want to talk with the supervisor and find out if he/she knew about the overtime.

I don't know that there is a statute of limitations on paying overtime. I don't think I would take a chance on that one.

If you are paying a separate check and a lump sum than you will use the supplemental income amounts for tax deductions the same as with a bonus check.

If more tax is taken out than needed it will be refunded on the employee's tax return.

Shirley

Also how is the overtime documented? Can it be verified? I have heard that even if it was not approved, if it can be proven that overtime was completed, it will be owed.

Sit down with the non-exempts supervisor and the non-exempt employee and come to an agreement about the back overtime prior to her filing with the Department of Labor, if everyone can agree on a fair amount, it will save you money in the long run, then having her fight in court, make sure that an agreement statement is signed.

It is true that if overtime is documented and worked that it must be paid, however, it also says if the company allowed it to be worked and if they knew it was worked or should have known it was worked than they must pay it.

I do not disagree it needs paid, however, I think that someone needs to discuss with the employee about approved and non approved overtime and what the companies expectations are when it comes to working overtime without permission. If it is worked at home and no one knows about it can it really be documented and was it really worked? The company may have had no way to know that it was being worked and if it was unapproved could argue against payment.

Shirley

Hello:

While I don't disagree with the above, it should be noted that the OP is a payroll clerk. If management wants to inquire about such things, then management should.

I think Chevygal should bring it up to her managers and let them make these determinations.

excon

I don't now