Purpose:

The purpose of this bulletin is to provide agencies with revised policies and procedures for addressing overpayments, including the creation of a new earnings code to track pending recovery determinations. These policies and procedures do not apply to the recovery of lost time.

Affected Employees:

Any employee who has received an overpayment of earnings is affected.

Background:

The recovery of overpayments is governed by Section 200(3) of the State Finance Law which states:

3.   (a) In any case where a state employee has, as a result of an administrative error by the state, received salary or other compensation payments in excess of that to which he or she was entitled, the state will not attempt to recover such overpayment, except in those cases described in paragraph (b) of this subdivision. Notwithstanding the foregoing, the state will, where such overpayment is still continuing, immediately reduce such employee's current salary so that the salary paid to such employee prospectively is the salary which the employee is entitled to receive.

      (b) Nothing contained in paragraph (a) of this subdivision shall prevent the state from recovering, by offset or otherwise, any overpayment made (i) for a period when the employee was neither performing services for the state nor on approved leave or (ii) under circumstances where the comptroller reasonably determines that the employee knew, or that a reasonable employee should have known, that the salary paid to him or her was in excess of that which he or she was entitled to receive.

Please note: New York State Labor Law Section 193(1)(c) and the applicable regulations (see 12 NYCRR Section 195-5.1) do not apply to governmental agencies and provisions regarding the deductions of wages due to an overpayment do not apply to governmental employees.

The following overpayment policies and procedures have been implemented to ensure that prior to any overpayment recovery: (1) the employee is afforded due process, and (2) a determination regarding recoverability of the overpayment has been made as follows: (a) the State agency has made a determination pursuant to State Finance Law Section 200(3)(b)(i), or (b)  the Comptroller has made a determination pursuant to State Finance Law Section 200(3)(b)(ii). These policies and procedures do not apply to the recovery of lost time.

Effective Dates:

The overpayment recovery procedures outlined below are effective immediately and must be used for all overpayment determinations going forward, regardless of the overpayment date.

OSC Actions – New Additional Pay Earnings Code:

OSC has created the following Additional Pay Earnings Code to use as a placeholder when an employee has received an overpayment of earnings and is being afforded due process, including the opportunity to appeal. This earnings code will not be used to collect any monies toward the overpayment.

Agency Actions - Correction of the Employee’s PayServ Record:

Once it is discovered that an employee has been overpaid, the agency must immediately take corrective action to prevent any further overpayment of earnings.

Overpayments Resulting from Job Data Transactions

• If an employee has received a compensation rate in excess of what they were eligible to receive, the agency must submit a Pay Change on the Job Action Requests page to correct each effective dated row in the employee’s record that requires an update. In some instances, this may also require a change to the Increment Cd.
• If an employee was placed in an incorrect position which resulted in a compensation rate in excess of what they were eligible to receive, the agency must submit a New Posn on the Job Action Requests page to correct each effective dated row in the employee’s record that requires an update.
• If the Empl Work Percent on the employee’s Job Data record is incorrect, the agency must submit a Data Chg on the Job Action Requests page using Reason code CPT (Chg Pct) and the correct work percentage for each effective date row that requires an update.
• If an employee has an incorrect Payroll Status and updating the employee’s Job Data record would result in the employee receiving reduced earnings, the agency must submit a transaction on the Job Data page utilizing the correct Action/Reason code and effective date (e.g., the employee’s Payroll Status is Active but should be Leave of Absence).
• If an employee is in a position designated as exception hourly but the employee should be paid as hourly, the agency must update the Employee Type Field on the Add/Update Position Info page from Excep Hrly to Hourly using the appropriate effective date.
• If an exception hourly employee is set up with the incorrect number of Standard Hours on the Job Data page, the agency must submit a Data Chg on the Job Action Requests page using Reason code CSH (Change Standard Hours) to reflect the correct number of hours the employee works per week.

Please note: If an update is needed to an under row on the employee’s Job Data record, the agency must submit a Data Chg on the Job Action Requests page using Reason code COR (Cor History).

Overpayments Resulting from Additional Pay Transactions

• If an employee has received an Additional Pay for a period of time in which they were not eligible, the agency must insert a row on the Additional Pay page using an Effective Date and End Date corresponding to the last date the employee was eligible to receive the payment.
• If the employee has received an Additional Pay for an amount in excess of what they were eligible to receive, the agency must submit a transaction(s) to correct the amount on the appropriate effective dated row and all applicable subsequent rows.

Please note: If an update is needed to an under row on the employee’s Additional Pay record, the agency must submit a Data Change on the Job Action Requests page using Reason Code COR (Cor History).

Agency Actions - Overpayment Notification to the Employee:

The agency must notify the employee in writing (e.g., dated notification via the employee’s work email, dated notification via the employee’s personal email, or dated letter via the United States Postal Service (USPS)) of the overpayment. The notification must occur at least four (4) weeks prior to the anticipated date of the paycheck that the employee’s earnings will be reduced by the rate of recovery related to the overpayment and must include the following information:

• A copy of State Finance Law Section 200(3).
• The circumstance(s) that resulted in the overpayment.
• The total amount of the overpayment.
• The overpayment recovery rate per pay period:
  • The recovery rate will be no more than 10% of the employee’s biweekly gross earnings, although the employee may (i) request a higher recovery rate for one or more pay periods, or (ii) request a lesser amount be approved by the agency in the case of financial hardship.
  • The 10% recovery rate does not apply to an employee who separates from state service at the end of the pay period. In these situations, the system will automatically recover as much of the remaining overpayment balance as possible.
• The anticipated amount and the paycheck date in which the overpayment recovery will begin.
• An explanation of the agency’s preliminary determination that recovery is permissible under State Finance Law.
• Employee instructions for appealing recovery of the overpayment including:
  • The appeal must be submitted in writing to the employee’s agency via email or the USPS.
  • The agency’s email or physical address to be used for the appeal submission.
  • The appeal must include factual details and/or legal reasons supporting the employee’s position that the overpayment did not occur or that recovery is not permissible under the State Finance Law.
  • The appeal must be received by the agency within twenty (20) calendar days from the postmark date on the overpayment notification mailing or the date the overpayment notification was emailed to the employee.
  • If an appeal is submitted as provided in the instructions, the agency shall not begin any overpayment recovery.
• A reminder that if an employee has an unsatisfied overpayment record that is currently deemed recoverable and moves to another State agency processed through PayServ, the overpayment recovery will resume in the new agency.
• Overpayments recovered in a calendar year subsequent to the calendar year the overpayment occurred will have tax implications as outlined in Payroll Bulletin Nos. 1037 and 1038.

Agency Actions – Agency Submitted Appeal on Behalf of the Employee:

These overpayment policies and procedures must be followed even if the agency is appealing the overpayment on behalf of the employee.

Agency Actions - Creating an Additional Pay Record to Capture the Overpayment Amount While the Employee is Afforded Due Process, including the Opportunity to Appeal:

While the employee is being afforded due process, including the opportunity to appeal, the agency cannot begin any overpayment recovery.

After the overpayment notification has been sent to the employee, the agency must create a record on the Additional Pay page using Earnings Code OVH to serve as a place holder for the overpayment amount as follows:

In addition, the agency must enter a General Comment with the following information:

• The date the overpayment notification was provided to the employee and the method of delivery (e.g., USPS, work email, personal email).
• The circumstance(s) that resulted in the overpayment.
• The period of time the employee was overpaid.
• Calculation of the overpayment including total overpayment amount.
  • If the overpayment occurs over multiple calendar years, provide the calculation for each year.

Agency Actions - Due Process Completed and No Appeal Submitted:

If, after the above overpayment notification has been provided to the employee, the employee does not submit an appeal within twenty (20) calendar days as provided in the notification, the agency must begin recovery of the overpayment using the following process:

• The agency must notify the employee in writing (e.g., dated notification via the employee’s work email, dated notification via the employee’s personal email, or dated letter via the USPS) with information regarding the recovery process, including:
  • The total amount of the overpayment.
  • The overpayment recovery rate per pay period:
    • The recovery rate will be no more than 10% of the employee’s biweekly gross earnings, although the employee may (i) request a higher recovery rate for one or more pay periods, or (ii) request a lesser amount be approved by the agency in the case of financial hardship.
    • The 10% recovery rate does not apply to an employee who separates from state service at the end of the pay period. In these situations, the system will automatically recover as much of the remaining overpayment balance as possible.
  • The amount and the paycheck date in which the overpayment recovery will begin.
• For pending overpayments entered in PayServ prior to issuance of this payroll bulletin and the creation of Earnings Code OVH, if an Additional Pay record using Earnings Code Qxx was created for only this overpayment and the Earnings field was blank, the agency must insert a row on the existing Additional Pay record using the current pay period begin date as the effective date and populate the Earnings field with the amount of biweekly earnings that should be recovered each pay period.
• If an Additional Pay record exists using the same Qxx Earnings Code for the calendar year in which this overpayment occurred and the existing overpayment record has not been completely satisfied, the agency must insert a row on the existing Additional Pay record using the current pay period begin date as the effective date and update the Goal Amount to include the sum of the existing and the new overpayment amount. The Goal Balance field automatically populates from the existing row and must not be updated by the agency. The agency should also confirm the value in the Earnings field represents the amount of biweekly earnings that should be recovered each pay period.
• If an Additional Pay record exists using the same Qxx Earnings Code for the calendar year in which this overpayment occurred and the existing overpayment record has been completely satisfied, the agency must insert a row on the existing Additional Pay record using the current pay period begin date as the effective date and enter the new overpayment amount in the Goal Amount field. The Goal Balance field will be blank and must not be updated by the agency. The agency should also confirm the value in the Earnings field represents the amount of biweekly earnings that should be recovered each pay period.
• If an Additional Pay record does not exist using the same Qxx Earnings Code for the calendar year in which this overpayment occurred, the agency must insert a row on the Additional Pay page using the following information:

*If the employee requests a lower recovery rate due to a financial hardship, the agency may consider certain factors, such as employee’s tenure, service record, personal circumstances, other non-mandatory deductions and whether they will receive enough earnings upon termination (e.g., accrual lump sum payout, Salary Withholding payout) to cover the outstanding overpayment.

• If an Additional Pay record was created using Earnings Code OVH and the Goal Amount included monies outside of this overpayment, the agency must insert a row on the existing record using the current pay period begin date as the effective date and update the Goal Amount to remove the amount of this overpayment.
• In addition, the agency must enter a General Comment with the following information:
  • Confirmation that the employee has been notified and either is not appealing the overpayment, or has not requested an appeal within the time period specified in the notification.
  • If an Additional Pay record was created using Earnings Code OVH and the Goal Amount included only this overpayment, indicate that the Earnings Code OVH record should be deleted.
  • The amount of the overpayment to be recovered each pay period.
  • The paycheck date in which the recovery of the overpayment will begin.
  • In the case of a financial hardship request, the agency must provide confirmation that the situation was evaluated prior to the approval and the agreed upon recovery rate.

Agency Actions – Appeal Submitted:

If the employee submitted an appeal within the period of time provided in the notification or the agency is appealing the overpayment on behalf of the employee, the agency cannot begin any overpayment recovery.

Agencies must submit the following documentation to OSC within two (2) weeks of receiving an appeal from the employee or within twenty (20) calendar days from the postmark date on the overpayment notification mailing or the date the overpayment notification was emailed to the employee if the agency is appealing the overpayment:

• Copy of the letter notifying the employee of the overpayment.
• Copy of the letter from the employee stating they are appealing the overpayment or a letter from the agency if appealing the overpayment on behalf of the employee, including factual details and/or legal reasons supporting the opinion that the overpayment did not occur or that recovery is not permissible under State Finance Law.
• The circumstances that resulted in the overpayment.
• A breakdown of the overpayment calculation by pay period.
• Copy of appointment letter provided to the employee.
• Any other documentation relevant to the case such as agency reference material provided to the employee.

Please note: OSC may request additional information from the agency.

OSC Actions – Subsequent to Appeal Review:

Once OSC has completed its initial review of the submitted documentation, OSC will either:

• Refer the matter back to the agency when OSC finds the employee was neither performing services for the State nor on approved leave during the period corresponding to the overpayment. The agency should determine if the employee did not perform services or was not on approved leave, and take the appropriate action based on their determination.
• Contact the employee providing the employee an opportunity to submit additional documentation or statement to support their appeal. After the review is completed, OSC will issue a written final appeal determination to the employee and provide a copy to the agency.

Agency Actions - Overpayment Appeal Determination Issued:

Once OSC or the agency has issued its final appeal determination, agencies must take the following actions based on the determination:

Overpayment Determined to be Unrecoverable

• If an Additional Pay record was created using Earnings Code OVH and the Goal Amount included only the overpayment amount applicable to this determination, OSC will delete the record.
• If an Additional Pay record was created using Earnings Code OVH and the Goal Amount included monies outside of the overpayment amount applicable to this determination, the agency must insert a row on the existing record using the current pay period begin date as the effective date and update the Goal Amount to remove the amount of this overpayment.
• If an Additional Pay record was created using Earnings Code Qxx, the Goal Amount included only the overpayment amount applicable to this determination, and no monies were collected toward the overpayment, OSC will delete the record.
• If an Additional Pay record was created using Earnings Code Qxx, the Goal Amount included monies outside of the overpayment amount applicable to this determination, and no monies were collected toward this overpayment, OSC will update the Goal Amount.
• If an Additional Pay record was created using Earnings Code Qxx and monies were collected toward the overpayment applicable to this determination, these monies must be repaid to the employee. Email the Overpayment Appeals mailbox for a determination of the appropriate repayment method.
• If the overpayment was not reflected in PayServ, no further action is needed.

Overpayment Determined to be Recoverable

• The agency must provide the employee in writing (e.g., dated notification via the employee’s work email, dated notification via the employee’s personal email, or dated letter via the USPS) information regarding the recovery process, including
  • The total amount of the overpayment.
  • The overpayment recovery rate per pay period:
    • The recovery rate will be no more than 10% of the employee’s biweekly gross earnings, although the employee may (i) request a higher recovery rate for one or more pay periods, or (ii) request a lesser amount be approved by the agency in the case of financial hardship.
    • The 10% recovery rate does not apply to an employee who separates from state service at the end of the pay period. In these situations, the system will automatically recover as much of the remaining overpayment balance as possible.
  • The amount and paycheck date in which the overpayment recovery will begin.
• If an Additional Pay record using Earnings Code Qxx was created for only the overpayment applicable to this determination and the Earnings field was blank, the agency must insert a row on the existing Additional Pay record using the current pay period begin date as the effective date and populate the Earnings field with the amount of biweekly earnings that should be recovered each pay period.
• If an Additional Pay record exists using the same Qxx Earnings Code for the calendar year in which the overpayment applicable to this determination occurred and the existing overpayment record has not been completely satisfied, the agency must insert a row on the existing Additional Pay record using the current pay period begin date as the effective date and update the Goal Amount to include the sum of the existing and the new overpayment amount. The Goal Balance field automatically populates from the existing row and must not be updated by the agency. The agency should also confirm the value in the Earnings field represents the amount of biweekly earnings that should be recovered each pay period.
• If an Additional Pay record exists using the same Qxx Earnings Code for the calendar year in which the overpayment applicable to this determination occurred and the existing overpayment record has been completely satisfied, the agency must insert a row on the existing Additional Pay record using the current pay period begin date as the effective date and enter the new overpayment amount in the Goal Amount field. The Goal Balance field will be blank and must not be updated by the agency. The agency should also confirm the value in the Earnings field represents the amount of biweekly earnings that should be recovered each pay period.
• If an Additional Pay record does not exist using the same Qxx Earnings Code for the calendar year in which the overpayment applicable to this determination occurred, the agency must insert a row on the Additional Pay record using the information in the chart provided in the Agency Actions - Due Process Completed and No Appeal Submitted section.
• If an Additional Pay record was created using Earnings Code OVH and the Goal Amount included only the overpayment amount applicable to this determination, OSC will delete the record once the agency has created an Additional Pay record using the applicable Earnings Code Qxx.
• If an Additional Pay record was created using Earnings Code OVH and the Goal Amount included monies outside of the overpayment amount applicable to this determination, the agency must insert a row on the existing record using the current pay period begin date as the effective date and update the Goal Amount to remove the amount of this overpayment.
• In addition, the agency must enter a General Comment with the following information:
  • Confirmation that the employee has been notified of the recovery process.
  • The amount of the overpayment to be recovered each pay period.
  • The paycheck date in which the recovery of the overpayment will begin.
  • In the case of a financial hardship request, the agency must provide confirmation that the situation was evaluated prior to the approval and the agreed upon recovery rate.

Note: When an AC230 paycheck reversal process is used to prevent an overpayment , please refer to Payroll Bulletin No. 2272 for more information and necessary agency actions.

Locked Query LQ_OVP_OUTSTANDING_Q_CODES:

This locked query identifies employees with an unsatisfied overpayment record using Earnings Code Qxx. Agencies should run this query each pay period to ensure that overpayment records are set up correctly and are being recovered in accordance with these policies and procedures.

Employee with an Unsatisfied Overpayment Record (Earnings Code Qxx) or an Overpayment Held Record (Earnings Code OVH) Moves to Another Agency within PayServ:

If an agency submits a Rehire, Concurrent Hire or Transfer transaction, they must review the Employee History Info Summary page including the Employee History Information tab and the Additional Pay Summary tab to determine if the employee has unsatisfied overpayment records using Earnings Code Qxx and/or an overpayment held record using Earnings Code OVH in the current record number and/or record numbers in which the EE Status is T (Terminated) or R (Retired). If an unsatisfied overpayment record or overpayment held record is identified, the new agency is responsible for continuing the overpayment process as follows:

• If the movement occurs in the same record number and there is a value in the Earnings field, the new agency should confirm the value represents the amount of biweekly earnings that should be recovered each pay period.
• If the movement occurs in the same record number but there is not a value in the Earnings field or there is an existing record using Earnings Code OVH, the new agency must contact the prior agency to determine the status of the overpayment and whether recovery should begin.
• If the movement occurs in a different record number and there is a value in the Earnings field of the existing overpayment record, the new agency must create a new Additional Pay record in their active record number using the same Earnings Code Qxx, Goal Amount and Goal Balance and determine the appropriate value for the Earnings field.
• If the movement occurs in a different record number and there is not a value in the Earnings field of the existing overpayment record or there is an existing record using Earnings Code OVH, the new agency must contact the prior agency to determine the status of the overpayment and whether recovery should begin.

In addition, the new agency must journal transfer the recovered monies to the agency in which the overpayment occurred.

Employee with an Unsatisfied Overpayment Record (Earnings Code Qxx) or an Overpayment Held Record (Earnings Code OVH) who Leaves State Service:

If an employee leaves State service and has unsatisfied overpayment records using Earnings Code Qxx and/or an overpayment held record using Earnings Code OVH, the agency in which the overpayment occurred should refer to the recovery options as provided in Section K – Guidelines for Accounts Receivable Management and Collection found in the Budget Bulletin section on the Division of the Budget website. The agency cannot pursue recovery using one of these options until due process is complete and if applicable, an appeal determination has been issued by OSC indicating the overpayment is recoverable.

If the overpayment is recovered using one of the methods outlined in Section K, the agency must update the employee’s overpayment record to indicate the overpayment is satisfied. If no monies were collected in PayServ, the agency must contact their auditor to delete the record. If monies were collected in PayServ, the agency must insert a row and update the Goal Amount to reflect the amount in the Goal Balance. In addition, a General Comment must be entered indicating the method of recovery and amount of the overpayment recovered using this method.

Questions:

Questions regarding this bulletin should be directed to the Payroll Earnings mailbox.

Questions regarding overpayment appeals should be directed to the new Overpayment Appeals mailbox.

Questions regarding AC230s should be directed to the Payroll and Reversal mailbox.