Overpayment and your Final Paycheck

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What happens if you were overpaid and then subsequently quit?  Can your employer deduct the overpayment from your final paycheck?

Federal law does not prohibit your employer from deducting an overpayment from your final paycheck.  The only limitation provided by federal law is that the amount of the deduction cannot reduce your pay below the federal minimum wage.

It is also a good idea to check your state’s labor laws.  States often have laws that give greater protections to employees than federal laws do.  For example, many states prohibit payroll deductions without a written authorization from the employee.  If this is the case, then your employer must pay you in full.

It is important to note that even if laws in your state prohibit a deduction from your final paycheck, you still owe your employer the amount of the overpayment.  Your employer can send the debt to a collection agency, or even sue you for the overpayment.  It is a good idea to set a repayment schedule with your employer in the event of an overpayment.

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Last Modified: 02-23-2017 06:51 PM PST

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