Best Practices Guide to Prevent Overpayments

This workplace reference guide is intended to be used as a tool to prevent overpayments by describing transactional and communication responsibilities for activities that impact employee pay.  It should be utilized by all University personnel responsible for reporting and processing transactions that affect employee pay. 


Overpayments may occur for a variety of reasons including, but not limited to: administrative error, late terminations or job records not ended on time, work schedule/default hours not ended correctly, duplicate transactions, untimely processing of unpaid leaves of absence, change in percent time or time reporting errors.  The department and UI Payroll have responsibilities to prevent and resolve overpayment situations.  Regardless of the reason for the overpayment, the University will pursue repayment of any overpaid amount in full. Prevention of overpayments and timely resolution of overpayment errors are important for the proper and responsible management of all University funds. In the case of federally sponsored awards (grants), the University is not eligible to draw funds for unallowable expenditures, such as overpayments, therefore, failure to correct the overpayment puts the University out of compliance with the terms of its awards.

Timely communication is key in preventing overpayments.  It is the responsibility of all University departments to implement effective systems and practices regarding communication of activities that affect employee pay.

Best Practices for Preventing Overpayments


  • Maintain adequate amounts of accruals and ensure that there are enough leave accruals available prior to making requests for absence.
  • Submit accurate and timely employee time records.


  • Ensure that employees have enough leave accruals available prior to approving requests for absence. Become knowledgeable about how to access available accrual balances.
  • Review employee time records in a timely manner to ensure that leave time taken is accurately recorded unless practice is conducted by HR Representative.
  • Notify HR Representative as soon as possible if an employee will be exhausting leave accruals so that a leave of absence can be processed immediately in the HR/payroll system. 
  •  If an employee terminates unexpectedly – notify HR Representative immediately so that a termination can be processed in the HR information system.
  • Notify HR Representative in advance of any changes in time percentage, pay, change in appointment type, etc. so that a HR transaction can be processed ahead of the change.

HR Unit Representatives (and others involved in reporting and processing HR transactions or related information)

  • Determine if communication systems and/or processes need improvement; consider a lean review of internal communication processes to minimize the impact to salary overpayments.
  • If department practices are for the HR Unit Representative to conduct time record review, review records in a timely manner to ensure that leave time taken is accurately recorded.
  • Review standard HR reports to ensure payroll and salary information is accurate.
  • Review appointments and payments already processed for an employee to ensure that duplication is avoided.


  • Process terminations as soon as notified by supervisor – preferably before or on the date of termination.
  • If an employee terminates unexpectedly – on or between the monthly payroll cutoff date and the first of the following month – process the termination in HRIS immediately and contact UI Payroll immediately, as they may be able to pull back the ACH for that individual and adjust the paycheck they will be receiving on the first of the next month.

  Undertime or Unpaid Leaves of Absence

  • Several days prior to payroll cut-off each month, UI Payroll will send an email notice to supervisors and HR Representatives regarding employees currently on an unpaid leave.  Review the “Leaves/Absence and Return Dates” report in the Admin/Reports/ section to identify individuals on an unpaid leave of absence whose dates may need to be extended through the end of the month.
  • If an employee is on an unpaid leave of absence and the department is not certain that the employee will return prior to the end of the month, extend the unpaid leave of absence to the 3rd of the following month. 
  • When an employee returns to work before scheduled and payroll cutoff has passed, departments should revise the return from leave date in HRIS and contact UI Payroll to request that an off-cycle check be processed for the employee for the time they worked.
  • If there is less than a full day of unpaid leave and the employee will not receive a paycheck on the 1st of the following month, send a paper Electronic Time Report (ETR) for the employee to UI Payroll before payroll cutoff. This is done so that the undertime can be deducted from the employee’s next paycheck, ahead of when it would otherwise be deducted.

Change in Status

  • Avoid retro-active change in status if at all possible.  Require that changes be approved the first of the month following the transaction being entered unless they can be entered prior to payroll cutoff in the month that the change in status occurred.


  • Overpayments are not allowed on externally sponsored grants and contracts (funds 500/510).  If an overpayment occurs for an individual who is appointed to an externally sponsored grant or contract, the related costs must be moved, as soon as possible, to an unrestricted funding source.  The Grant Accounting Office regularly monitors overpayments to ensure that the costs are moved off as necessary.  If, however, you are aware of an overpayment situation related to an externally sponsored grant or contract in your department, please notify the appropriate Grant Accounting contact so that it can be removed promptly.

Overpayment questions may be directed to June Lester in Payroll Services, or 335-2383.