Opportunity to Dispute a Wage Overpayment Letter

Author: Alice Gilman

When to Use

The below letter may be used to notify an employee of the opportunity to dispute a wage overpayment. An employer should use this letter if an employee has not responded within 30 days to the employer's initial letter informing the employee of a wage overpayment.

Customizable Letter

[insert organization's logo, name and address]

[insert date]

[insert recipient's name]

[insert recipient's physical address (and/or email address if applicable)]

Subject: Wage Overpayment

Dear [insert recipient's name]:

Our records indicate you were overpaid a net amount of $[insert dollar amount] for the pay period ending [insert date]. To date, you have not yet arranged for repayment. If you disagree that there was an overpayment, please contact [insert contact person's name] within two weeks of the date of this letter to explain why you believe you do not owe this amount. Please submit any relevant documentation (i.e., a time sheet showing your actual hours worked). Based on the information you provide, we will make a final determination, including our agreement or disagreement with you and the reason for our conclusion within one week.

You have the right to meet with us, and an attorney, within one week of receiving our reply to discuss any remaining disagreements concerning recovery of the overpayment.

If you agree that you were overpaid, you have two options for repayment:

  1. Personal check - You may write a check for the net amount of the overpayment. Please sign the enclosed Employee Acknowledgment of Overpayment/Authorization to Reduce Wages and return it with the check to [insert contact person's name and address].
  2. Payroll deduction - You may have your next wage payment reduced by the net amount of the overpayment. Please sign the enclosed Employee Acknowledgment of Overpayment/Authorization to Reduce Wages and return it to [insert contact person's name and address].

If you do not respond within two weeks of the date of this letter, we will inform you by letter that $[insert dollar amount] will be deducted from your next available wage payment.

If it is not possible to recover the entire payment from the next wage payment, we will deduct $[insert dollar amount] from each wage payment until the repayment is complete.

If you have any questions, please do not hesitate to call me at [insert phone number].

[insert closing (e.g., Sincerely, Very truly yours,)]

[insert handwritten signature (for a mailed letter) and typed signature]

[insert sender's title]

[insert enclosure line as applicable (e.g., Enclosure or Enclosures)]

Tips

An employer should send this letter to the employee by certified mail, return receipt requested.

The sender's address is usually included in letterhead. If you are not using letterhead, include the sender's address at the top of the letter one line above the date. Do not write the sender's name or title, as it is included in the letter's closing. Include only the street address, city and ZIP code.

If, based on information provided by the employee at the meeting, the employer maintains that an overpayment occurred, the employer should send the employee the Advise an Employee of Pay Deductions to Recoup a Wage Overpayment Letter. An employer should also send that letter if the employee still does not respond or agree to meet to dispute the overpayment.

Remember to enclose the Employee Acknowledgment of Overpayment/Authorization to Reduce Wages.

Warnings

An employer should document the employee's waiver of the opportunity to seek legal counsel and ensure that the employee waives this right voluntarily.

The above letter is a model letter but, if necessary, it should be modified to comply with any applicable state and local laws.

Additional Resources

How to Recoup a Wage Overpayment

How to Obtain an Employee's Consent to Claim a Refund of Overwithheld FICA Taxes

Request an Employee's Consent to Claim a Refund of Overwithheld FICA Taxes - Form

Recoup a Wage Overpayment - Worked Example