Can an employer deduct the gross amount for an overpayment?

UPDATED: Oct 1, 2022

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Can an employer deduct the gross amount for an overpayment?

I was over paid in error and my employer is telling me that they do not need my consent to deduct the amount from my next paycheck. Also, although I only actually received the net amount of $157, my check will be deducted $270 to cover the amount with held. How can this be legal?

Asked on October 26, 2018 under Employment Labor Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

1) They do need your consent (unless you signed any document or copy of an employee handbook stating that they may deduct in the event of overpayment, in which case signing same will be taken as furnishing your consent).
2) If you don't consent, they may take employment action against you (unless you have a written employment contract protecting you), such as demoting, suspending, or terminating you--that is because without an employment contract protecting your employment, you are an "employee at will" and may be terminated, or suffer anything less than termination (like suspension), at any time, for any reason. The could also, if they elect to, sue you for the monye.
3) You are wrong: they are entitled to the gross amount back because all of it was either paid to you (the money you received) or paid for you, on your behalf (such as your share of taxes). Payments made for  you convey a benefit on you. However, since are not entitled legally to any benefit from a mistake, you have to repay it all, You should be able to recapture or get back that money later: for example, if taxes were overpaid on your behalf, that overpayment will reduce what you owe in taxes at the end of the year or come back to you as a refund. While you have to keep records and follow-up, any overpayment on your behalf should come back to you, so you should not be losing anything by repaying the gross amount: only the timing of when you get the money (e.g. at tax time vs. now) changes.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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