Ask HR: Employee has been accidentally overpaid.

Dear HR,

Due to a reporting error by my employee, they were over-paid 5.75 hours for the last pay period. We have a signed payroll deduct form authorizing the deduction of those hours from the next pay check; but now we need to terminate this employee for a major policy violation. Are there special rules on deducting from a final check? What is the max amount or {0c2d428c3cefef4a77c472786cabf3d957ca1c1fde265c02f19cd1ec2d7db907} that can be deducted?


HR Answer:

Employers are entitled to recoup all overpayments of wages, so as long as you can clearly show that your employee received more than was due. In the past, the Oregon Bureau of Labor and Industries (BOLI) viewed overpayments as a type of advance and didn´t consider deductions from future paychecks to be a violation the law. However, in federal court, withholding money from an employee´s check to recoup an overpayment is considered an illegal deduction under the Oregon statute. Confusing, right?!? As a matter of policy, BOLI does not accept or pursue this type of wage deduction claim because the employer typically has a valid counter claim. Of course this wouldn’t prevent your employee from initiating a private action and pursuing a lawsuit in court. So in other words, you can still be sued! Repayment arrangements that don´t involve a paycheck is your wisest option. If you do choose to pursue repayment from a future paycheck, your best practice is to obtain a signed authorization from the employee (keeping in mind you still risk being sued). To prevent over-reporting of hours, Employers should communicate policies and procedures clearly to employees regarding clocking in and out for scheduled shifts. Employees who fail to follow these procedures may be subject to disciplinary action. One time-tested remedy (excuse our pun!) is the use of some type of time clock system. Cardinal offers a system that can be used on any platform – including a direct link to payroll. If you would like assistance in implementing or updating your policies and procedures concerning time reporting, or would like to review our time clock options, contact Cardinal today!