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Osage County weighs buying corrected W-2s after ADP payroll configuration errors
Summary
County finance consultants told commissioners that payroll codes set up in ADP led to incorrect tax reporting for employees with CAPERS (a retirement deduction). Commissioners asked consultants to cost out corrected W‑2 production and to investigate withholding payments to ADP while issues remain unresolved.
Miranda, a contract consultant from SJHHL, told the Osage County Commission on March 31 that recent payroll configuration fixes revealed a broader problem: ADP had been set up with incorrect earnings codes that caused CAPERS retirement contributions to be omitted from employees’ Kansas taxable income and produced incorrect W‑2s for a substantial subset of staff. Miranda said the county’s consultant group had built corrected payroll-code templates, tested them and could run corrections, but ADP must process corrected W‑2s or the county must pay a third party to prepare and file them.
The misconfiguration affected employees with CAPERS deductions; Miranda said hundreds of county employees could be impacted. She described steps taken this month to add new earnings codes, to configure employer HSA contributions, and to fix a uniform-allowance configuration so the systems now produce expected results going forward. Miranda said SJHHL can estimate timeline and cost for producing corrected W‑2s and revising prior-period filings if ADP cannot or will not process the corrections in a timely way.
County legal counsel flagged contract remedies and remedies options at the meeting, noting the county could withhold payments to ADP or pursue dispute remedies under the contract while the county evaluates damages. Commissioners asked staff and SJHHL to gather a short list of concrete options and estimated cost and schedule for an SJHHL-driven fix so the board can decide whether to continue pressuring ADP to act or to fund an external correction.
Why it matters: Incorrect W‑2s can create tax filing problems for employees and exposure for the county. Commissioners instructed staff to get a timeline and cost estimate from SJHHL for preparing corrected W‑2s and for an accounting of any ADP charges that have been or might be billed to the county.
What’s next: SJHHL will return with cost and timeline estimates for correcting the W‑2s and will research whether ADP has charged or will charge fees for correction runs; the commission discussed, but did not yet adopt, options to withhold further payments to ADP pending resolution.
Attribution: Miranda (SJHHL consultant) provided the technical summary and recommendations; county legal counsel summarized contractual remedies and withholding options. The commission directed staff to report back with a price and timeline for corrected W‑2 production and with a survey of any ADP charges found on bank records.
