How to Recoup a Wage Overpayment

Author: Alice Gilman

An overpayment of wages can occur for many different reasons. For example, it may be the result of inaccurate or delayed payroll processing, inaccurate accruals upon an employee's termination, payroll system failure or even clerical error. Regardless of the reason, an employer is generally entitled to recoup an overpayment in full in a reasonable and timely manner.

When recouping a wage overpayment, an employer must comply with both federal and state law and its own internal policies. An employer's failure to carefully comply could lead to potential civil and/or criminal liability.

The following steps will help an employer properly recoup overpaid wages from an employee.