Recoup Payroll Overpayments

Key Points

  • An overpayment of wages can occur for many different reasons, such as inaccurate or delayed payroll processing, inaccurate accruals upon an employee's termination, payroll system failure or simple clerical error.
  • Regardless of the reason, an employee who is overpaid does not have the right to keep the overpaid amount and the employer is entitled to recoup it in full in a reasonable and timely manner.
  • An employer must comply with IRS rules and procedures to properly recoup overpaid wages from an employee.

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