Why does my Employee have an Overpayment?

If an employee has an overpayment in DailyPay, this means that the amount of their recent DailyPay transfers turned out to be more than the paycheck that was received for that employee. Overpayments occur when DailyPay does not receive the Net Earnings file in time, at all, or for the correct amount. Overpayment can also occur in cases of over reported Gross Earnings.

Overpayments are rare, but if it occurs, DailyPay offers several solutions for an employee to resolve it.

How does an employee pay an overpayment back? 

When an employee has an overpayment and next logs into the DailyPay app, they will see an overpayment dollar amount and will be prompted to choose one of two options. These are:

1. Pay the overpayment from multiple paychecks, which means the employee's paychecks will be less the repayment amount in each paycheck until the full amount is paid off.
2. Pay the full amount automatically from their next paycheck.

If an employee does not select a payment plan, by default our system will resolve the overpayment on the following payday. Once the overpayment is repaid and the employee has earnings available again, they’ll be able to make DailyPay transfers again. 

What if an employee wants to make a transfer but they have an overpayment?

1. If they pay the overpayment in full, from their next paycheck, they can make DailyPay transfers after that payday.
2. If they pay the overpayment from multiple paychecks, they can make DailyPay transfers again once the full amount is paid back. An employee should pay the full overpayment amount before making DailyPay transfers again. Although, transferring on a payment plan will cause the user’s pay plan to automatically cancel. Their entire remaining negative balance will be taken from their next paycheck.

Selecting a Payment Plan

Payment Plan

At this point, the employee has selected a payment plan in 2, 3, or 4 installments. At the end of the pay period, when the user is pre-settled, the negative balance is split into equal parts by how many installments the user chose to pay back and that amount is deducted from their Remainder Pay.

Example: Overpayment totaling $300 and the employee selected to resolve the overpayment in three (3) installments. From the next three (3) paychecks DailyPay receives, we will deduct $100 from their net earnings on payday. 

Transferring while on a payment plan:

If the user tries to transfer while on a payment plan, they will see the following message in-app after they start their transfer. This will appear before they enter their transfer amount and will require the user to actively check the acknowledgement box to proceed.

Cancelling DailyPay account while on a payment plan

If a user attempts to cancel while on a payment plan, they will see a screen telling them that their next paycheck will still be handled by DailyPay.

After completing the cancellation process and on future logins, they will see a reminder on the homepage. For more details about the cancellation process, please refer to the What if my employee wants to cancel their DailyPay account? article.