I agree that the Claim of Right procedure is not the correct procedure in this case. Your employer should adjust your W-2 to reflect the net wages (after repayment).
If it does not, you can file your tax return with a "substitute W-2" form, but be prepared with documentation to explain if the IRS asks.
You might also file a complaint with your state labor board, since the employer's refusal would be costing you additional tax money (as well as, presumably, they will be over-taxing you on social security and medicare tax).
But the 1341 procedure is not applicable in this case.
