Legal Question in Business Law in California

Employer Refuses to Correct Payroll Errors

I have alerted my employer to errors on my W-2 for 2007 and 2008 (they reported benefits for my spouse as taxable income because they incorrectly had me classified under domestic partnership instead of marriage). The income misstatement has resulted in many thousands of dollars of additional taxes I have had to pay unnecessarily. I have been in contact with the Tax Law department of the IRS which says it is clearly my employer's obligation to correct this error once notified. However, my employer has been ''researching'' this issue for 4 months now, while I cannot file a 1040x for 2007 or 1040 for 2008 because my income is overstated. Tens of thousands of dollars of income tax refunds are on hold for me in total. I have given my employer detailed citations of IRS conversations and explicit instructions on how to handle W-2cs and W-3cs for IRS transmission. What recourse do I have if my employer does not act? I have attempted to resolve this amicably through dozens of conversations and in person discussions but the raw ineptitude and indifference of my employer leave me to believe I need to initiate legal action to precipitate action.


Asked on 2/05/09, 9:25 pm

2 Answers from Attorneys
Adam Telanoff Telanoff & Telanoff

Re: Employer Refuses to Correct Payroll Errors

It does seem to be a rather long time to correct a simple error.

You would have grounds to file a lawsuit, seeking as damages the amount of excess money withheld by the IRS.

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Answered on 2/06/09, 2:05 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Employer Refuses to Correct Payroll Errors

"Withheld by the IRS?" The excess is withheld by the employer, not the IRS.

I would agree that the time taken is too long, unless perhaps the issue of a same-sex marriage is present. This might raise legitimate questions that may not even be resolved in the courts yet. whether these kinds of issues are present or not, however, I suggest having an attorney draw up, but not file, a lawsuit; then show it to the employer (instead of merely sending a letter), indicating that the suit will be filed in X days if the matter is not resolved to your satisfaction by then.

Your lawyer can also advise you on the amount and extent to which you can claim interest, attorney fees, or punitive damages.

The timing and aggressiveness of any legal actions you take should be calibrated to the attitude of the employer and your dependence on the job, promotion possibilities, etc. I know that retaliatory firings, etc. are often illegal, but a sour relationship might be to your long-term disadvantage overall.

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Answered on 2/07/09, 6:07 pm


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