| Effective Date: 07/01/05 |
Cancellations and Rewrites
It is the policy of the State of North Carolina that when certain parameters are met, Central Payroll will cancel paychecks or direct deposits and issue rewrites as needed.
G.S. 143B-426.39 Powers and Duties of the State Controller
Employees are paid on the monthly and mid-month payrolls according to PD-105 forms received from the Personnel Office and from the timesheets submitted to the Payroll Office. The net pay amounts for an employee can be incorrect for many reasons, including employee separation, leave of absence, or keying errors. If an employee does not have a right to payment or the payment amount is in excess of the amount due the employee, then the payment is cancelled and a stop order issued with the Treasurer's Office. If the notice of overpayment is received after the payment has cleared the Treasurer's Office, then the employee is liable to the agency for the amount of the overpayment. It is the responsibility of the agency's Personnel Office to collect overpayments issued to employees. The Central Payroll Division provides two cancellation/rewrite (C&R) payroll dates and one stop order date for processing payment cancellations and rewrites. The C&R's are processed on the first business day of the month and the first business day after the 15th of the month. Stop orders are processed four business days before the monthly payroll pay date. Employee pay is cancelled by one of the two following procedures:
Telephone Stop Orders The Personnel Office may notify their Payroll Office to stop direct deposit of pay into an employee's account by calling the Payroll Office by the payroll deadline for stop orders. The request must be followed up with a written notification of the stop order by completing the Stop Order Form. This form is available in the forms section of the Central Payroll web site, located at: http://www.ncosc.net/sigdocs/sig_docs/payroll/Payroll_Forms.html Online agencies directly key stop orders into the Central Payroll System. The OSC keys stop orders for all other agencies. The form is maintained at the agency in the employee's file. Processing a telephone stop order does not convert the direct deposit into a paper check, but rather terminates the payment completely. An employee whose direct deposit is stopped cannot be paid a corrected amount until the next C&R payroll cycle is run. Cancellation of Paper Checks The Personnel Office must submit a completed Stop Order form to the Payroll Office if the stop pay request is for a paper check. The cancelled check must be returned to the Payroll Office with the Stop Order form. The Personnel Office is responsible for notifying the employee, if possible, seven days prior to the pay date that their check will be cancelled and rewritten, if appropriate, and on what date they can expect payment. The Payroll Office must hold the check until the next C&R payroll, at which time the cancellation and rewrite will be processed on the payroll system. The following steps should be performed by the agency Payroll Office:
The Cancellation Payroll is a negative payroll that processes check cancellations, personal check refunds, and refunds of employee deductions. Only one negative payroll can be run for an individual employee during a C&R processing cycle. Other than a check cancellation, the most common types of transactions processed during a negative payroll include:
Personal Check Refunds (PC Refunds) An employee is usually overpaid because the employee has separated and notice of the separation is not received in the Payroll Office before the payment is disbursed, or an employee is overdrawn on leave balances and no notification is provided to the Payroll Office. It is also possible for an overpayment to result from a miscalculation of the amount due an employee by keying an incorrect hourly rate, hours worked, etc. It is the responsibility of the Payroll Office to calculate the amount of overpayment once the notice of overpayment is received. The calculation of overpayment involves determining the amount of gross overpayment and then applying deductions to determine the net amount overpaid. This calculation is simplified by using the OSCPXA 06 Form, Personal Check Refund Worksheet located at: http://www.ncosc.net/sigdocs/sig_docs/payroll/Payroll_Forms.html When the calculation of overpayment is complete, the Personnel Office is notified of the amount of overpayment. It is the Personnel Office's responsibility to notify the individual of the overpayment and to collect the amount from the overpaid individual. The procedure for handling receipt of the overpayment depends on various factors: whether the reimbursement is at gross or net and the timing of the reimbursement. Gross Versus Net Personal Check Refunds Net PC refunds are due from the overpaid individual under the following conditions:
Gross PC refunds are due from the overpaid individual under the following conditions:
Processing Personal Check Refunds Personal check refunds are processed according to the timing of the reimbursement: If the refund is for an overpayment that occurred in the current calendar year, then the repayment check issued by the overpaid individual is deposited to the payroll clearing account, 211240. A request for an accounts payable check made payable to the Office of the State Controller, Central Payroll Division (Vendor Number 561611588 01) and coded to account 211240 is sent to the Accounts Payable Section. The following is submitted to the Central Payroll Division:
The Central Payroll Division processes all PC refunds on the payroll system, but will not accept refunds that do not include an AP check payment for the overpayment or proof of a completed funds transfer on the CMCS. When the payroll cycle is completed, the Central Payroll Division remits the total negative cost of the payroll back to the agency. The payment received from the Central Payroll Division should be deposited into the payroll clearing account, 211240. If the refund is for an overpayment that occurred in the prior calendar year, then the repayment cannot be processed on the payroll system. Repayments for a prior calendar year are deposited by the agency into the appropriate salary and matching benefits expenditure accounts, except when the overpayment occurred in a prior fiscal year. The State's fiscal year runs from July 1 through June 30. Refunds of costs associated with a prior fiscal year should be deposited to an agency's 5383AA discretionary account that is used to record refunds of prior year expenditures or receipts. A corrected Form W-2C can be issued to the overpaid employee even if the repayment is for a prior calendar year if the employee requests a corrected W-2 form by June 1. Refunds of Deductions Refunds of deductions are also processed on the two Cancellation & Rewrite payroll processing cycles. Refunds of Statutory Deductions Statutory deductions are refunded when the amounts deducted were over withheld as a result of a payroll keying error. These amounts can only be refunded if the agency's Payroll Office receives notification of the error prior to December 31 of the calendar year in which the error occurred. Statutory deductions include the following:
Refunds of Garnishments and Levies Garnishments and levies are not refundable. Employees must contact the clerk of court that ordered the garnishment or governmental agency that submitted the levy to request a refund. Refunds of Voluntary Deductions Refunds of voluntary deductions are processed when the plan administrator provides the agency's Payroll Office an authorization for a refund of previously deducted amounts. Requests for refunds for the following voluntary deductions are not allowed after December 31 of the calendar in which the deductions occurred:
Refunds of the State's medical insurance plan are available to an employee without prior authorization from the administrator if the deduction was made in error and the incorrect amount was deducted for two months or less. Refunds of Deferred Deductions Refunds of deferred deductions result in negative payroll costs. The Central Payroll Division will reimburse to the agency any employer costs affected by processing deferred deduction refunds. The reimbursement of costs by the Central Payroll Division should be deposited into the payroll clearing account, 211240. The following deduction types are classified as deferred deductions.
Refunds of deductions for the NC Flex Plans (deduction codes 445 through 452 and 454) are not allowed during the year unless there is a qualifying family status change. Notice of the status change must be submitted by the appropriate plan administrator. For more information related to payroll deduction refunds, refer to the Deductions section of this manual.
Rewrite or special payrolls allow the state to replace checks or direct deposits that have been cancelled, to pay an employee for time already worked prior to adding them to the permanent processing cycle or to pay out the balance of a contract. When a check has been cancelled or a stop order issued, the Personnel Office must provide documentation to the Payroll Office to process a check for rewrite. The documentation required to process the rewrite must include one of the following:
A rewrite must be issued for an amount equal to or less than the original payment. However, if an employee is due an amount greater than the original payment, the original payment must be processed and the difference issued as a rewrite. All payments processed as a rewrite or special payroll are taxed according to the exemptions claimed on the employees' W-4 and NC-4 forms.
If a payroll check is lost, stolen or damaged in such a manner that it cannot be processed by a banking institution, the employee can request a replacement check. To request a replacement for a lost, stolen or damaged check, the employee must submit a notarized Affidavit and Indemnity Bond to the agency payroll office. The agency then sends the affidavit to the Central Payroll Division where a stop payment is issued on the lost, stolen or damaged check. A replacement check is then generated by the Central Payroll Division and mailed to the requesting agency's payroll office. The affidavit form is available at: http://www.ncosc.net/sigdocs/sig_docs/payroll/Payroll_Forms.html
This policy applies to all State entities.
There are no exceptions to this policy.
There are no special terms for this policy.
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