My employer would pay us our OT on a 2nd check instead of paying it with our regular wages. This allowed more take home pay for us. Now they are saying they can no longer do that, is that right?

If additional (supplemental) wages are paid separately from regular wages, there are two common and IRS-accepted methods for calculating taxes.

1. Withhold at a flat 25% (most states have similar requirements, at varying rates); or

2. Calculate the withholding as though the additional wages were paid at the same time as regular wages. Subtract the withholding on the original check from the total, and withhold the difference from the second check. As you can see, this is the same effect as paying the supplemental wages on the same check.

Paying supplemental wages separately from regular wages, and using the employee's W-4 as the calculation basis is not an IRS-approved method. And though I'm sure this is not the answer you wanted, they're right. And, as a payroll professional for many years, I must say I applaud them for knowing the requirements.