Employment Law/Incorrect Pay
QUESTION: Employee entered PTO and sick leave on time card in December 2012 and February 2013. Employer paid her according to what was entered in time card. Now she is saying she wants to correct the PTO and sick leave that was originally paid to her because it was recorded incorrectly. She is claiming it should be work instead of PTO/Sick Leave. This is for the state of Ohio. How far back legally can we go back to make this type of correction? Do we have to go back as far as December 2012 or is it only for 2 pay periods or for 6 months? what is Ohio's time frame to go back and make this correction/adjustment. For example, for the state of California we can only go back to 2 previous pay period to make this correction anything beyond that we don't have to make that correction. Can you please help. thank you, Sammie
ANSWER: First of all what proof does she have that it is incorrect? If it was entered on the time card it was probably entered correctly and she is trying to recoup sick pay she has already used.
Before it goes anywhere I would want proof that she was working those days and not off on sick leave.
I could find nothing in the Ohio rules to address this problem. As with most states you need to follow your company policies. Write up a policy that any timesheet errors should be corrected no later than the next paydate and make sure all employees sign for a copy of the new policy. Post the new policy on the breakroom wall if you have one. Than you have grounds to go back no further than the last pay period. You can use 2 pay periods if you want to make it the same as California so it can be uniform across all states. California has the most liberal laws so if they say two months than I can't image any other state having more liberal laws.
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QUESTION: This is a two part question. 1. An employee doesn't want any federal income taxes to come out from his earnings and he fills out the W4 line 7, can this be done and as an employer do we have to honor this? 2. Is it correct to say an employee does not have a limit when claiming the number of allowances on their W4?
If the employee fills out line 7 we file the W-4 in their file and we abide by it. We do not know what their tax situation is at the end of the year. This is valid for 1 year and must be filled out each year. See below explanation by IRS:
If an employee qualifies, Form W-4 is also used by the employee to tell you not to deduct any federal income tax from his or her wages. To qualify for this exempt status, the employee must have had no tax liability for the previous year and must expect to have no tax liability for the current year. However, if the employee can be claimed as a dependent on a parent's or another person's tax return, additional limitations may apply. See the instructions for Form W-4 (PDF). A Form W-4 claiming exemption from withholding is valid for only one calendar year. To continue to be exempt from withholding in the next year, an employee must give you a new Form W-4 claiming exempt status by February 15 of that year. If the employee does not give you a new Form W-4, withhold tax as if he or she is single, with no withholding allowances. However, if you have an earlier Form W-4 (not claiming exempt status) for this employee that is valid, withhold as you did before.
If we feel the W-4 is wrong we must still honor the W-4. You should inform your employees of the importance of submitting an accurate Form W-4. An employee may be subject to a $500 penalty if he or she submits, with no reasonable basis, a Form W-4 that results in less tax being withheld than is required. Refer to Chapter 4 of Publication 17, Your Federal Income Tax for Individuals.
See below the question and answer from the IRS website:
Q8: What should I do if an employee submits a valid Form W-4 that appears to be claiming an incorrect withholding amount?
A8: You should withhold federal income tax based on the allowances claimed on the Form W-4. But, you should advise the employee that the IRS may review withholding to ensure it is adequate, and that the IRS may direct you, as the employer, to withhold income tax for the employee at a certain rate if the review indicates the employee’s withholding is inadequate. Once this occurs the employee will not be allowed to decrease their withholding unless approved by the IRS.