Last Wednesday morning in a special meeting, Scotts Valley City Council voted unanimously to move forward with a settlement with workers after it was discovered the pretax contributions of some employees were mistakenly taxed.
Staff said payout—related to overpayments caused by a payroll system update—likely wouldn’t exceed $72,500.
“Impacted employees have received amended wage and tax statements…and may have incurred costs associated with refiling of tax returns,” stated a July 10 staff report. “The City desires to avoid the potential uncertainty, expense and delay of any potential litigation related to the overpayment and tax issue and seeks to settle potential claims, subject to approval by the City Council.”
The City says it performed a detailed review of payroll from 2020-23, with the help of a third-party, which highlighted overpayments in special incentive pay.
The decision will still need to be ratified at a future meeting.
