Abstract

To improve employee satisfaction and reduce early attrition, many organizations offer paid time off (PTO) in advance, before it is fully earned. However, when employees leave the organization before they have accrued the advanced PTO, employers are required to recover the resulting overpayment. At present, there is no fully automated, legally compliant solution within enterprise resource planning (ERP) and human capital management (HCM) systems that can reliably handle the varying payroll regulations across U.S. states. This paper introduces the Intelligent Time-Off Recoupment System (ITORS), a five-component enterprise architecture made up of an HR Policy Engine, Time Off and Absence Monitor, Consent Workflow Module, Payroll Recoupment Engine, and Compliance Reporting Hub. Together, these modules operate as an event-driven pipeline that captures employee consent, computes payroll deductions in line with state-specific regulations while maintaining minimum wage compliance, and produces structured compliance reports in real time. ITORS is designed to integrate with platforms such as Workday, Oracle HCM Cloud, SAP SuccessFactors, ADP, and custom ERP systems through standard APIs. The paper further presents a multi-state legal compliance matrix, details the system architecture using process diagrams, and highlights four key operational failure points in existing PTO recoupment processes. It also establishes the scale of the issue through a real-world overpayment case and published recovery-rate benchmarks. To support practical adoption, a phased implementation strategy is included. Overall, ITORS advances intelligent HCM automation by offering a practical, reusable framework for addressing a complex compliance challenge, reducing financial risk, improving procedural fairness, and strengthening employee trust.

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