Employment Law Questions? Ask an Employment Lawyer.
Thank you for your question.
What state are you in?
I'm not sure if you saw my questions. I asked it because a few states have some limitations on what you can ask an employee to sign, in terms of an authorization to withdraw from their pay.
In some states, it is legal to deduct from pay without having an authorization signed when the reason is over payment. In some states, you have to have a signed authorization to deduct pay and if they refuse, you can terminate that employee.
In very few states, a refusal by the employee would be legal and you could not terminate the employee. Without the exact state you are talking about, I can not give a more specific response to your question because this is a matter of state law. Federal law would allow the termination.
The New York Department of Labor has held, for a long time, that such deductions would not be permitted AND that terminating an employee for not repaying would be illegal.
Now, as of November 6, 2015, New York has promulgated a new rule concerning repayment which expressly states that an employer can make such deductions and they do not even require written authorization.
What matters is the timing of the deductions.
If you are recovering from the very next paycheck, the rule allows you to take the entire overpayment (if it is less than or equal to that check). However, where the overpayment is greater, you must not take more than 12.5% of the gross wages earned AND the deduction can't reduce the effective hourly rate below minimum wage for the week.
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