Excess employer benefits are caused by employees changing their leave dates after claims have already been filed, or actual payments from third parties (state & insurance) differing from the projections. Employees cannot receive more than 100% of their wages, which means they need to repay their employer for excess benefits received.

What happens when employees receive excess benefits?

1. One week after the end of the leave, if there's excess benefits, Cocoon will notify pay admins of the excess employer benefits before an employee returns from leave. These excess employer benefits are reflected as gross pay (pre-tax, pre-deduction).

2. Cocoon will notify an employee of their excess employer benefits a week after they’ve returned to work.

3. The company and the employee should work together to recover these funds, outside of Cocoon.

4. Once you've worked with an employee to recover these funds, indicate the amount recovered in the Cocoon dashboard to ensure that your employee's pay is appropriately reflected.

While Cocoon can surface repayment amounts, it is the responsibility of an employer to coordinate repayment directly with employees. There may be circumstances, including recoupment of overpayment across calendar years, that could have tax implications including filing W2C, W3C and 941X. Your tax professional can provide more tailored guidance regarding your specific situation. Cocoon cannot provide tax, accounting or legal advice.

Once you’ve worked with an employee to recover these funds, please indicate the amount recovered in Cocoon to ensure that your employee’s pay is appropriately reflected.