If an employee is overpaid, an employer can legally reclaim that money back from the employee. However, that employer usually only has a certain amount of time to claim that money back. The employer may make deductions to recover overpayments for a period of six (6) years from the original overpayment.

Can your employer take money out of your check?

The only deductions your employer can take from your pay are deductions he or she must take and deductions you have agreed to. Your employer must have your agreement in writing. Sometimes employers take money out of your pay to pay themselves back for cash shortages, or property damage. But this is not legal.

What happens when an employer takes money from your paycheck?

When an employer terminates an employee, the employer can deduct from the employee’s final paycheck the value of any of the employer’s property that the employee didn’t return. So what happens if an employer wrongly accuses you of theft? Well, the law covers that too.

Do you have to give the extra money back to the employee?

Telling employees they have to give the money back will not necessarily be a pleasant conversation, but it will only get harder the longer the extra money is in the employee’s name. Let the employee know what happened. It might be tempting to just dock the employee the extra amount from her next paycheck, but try to resist that urge.

Do you have to give your last paycheck to the employer?

The FLSA requires that employers pay employees for hours worked, but the act doesn’t require that employers issue a departing employee’s final paycheck immediately upon resignation. Instead, the federal law defers to state laws that might require employers to hand over your final paycheck immediately.

Is it illegal to deduct money from an employee’s paycheck?

Let the employee know what happened. It might be tempting to just dock the employee the extra amount from her next paycheck, but try to resist that urge. It’s illegal in some states to deduct money without the employee’s explicit agreement, and other states require notification and limit the amount of money you can deduct.