Can a Utah Employer Deduct an Overpayment from its Employee’s Checks?

Can a Utah employer deduct accidental overpayments to an employee from a later paycheck to the employee? If you are a private employer, you might be surprised by the answer.

Employers cannot lawfully deduct or offset wages from an employee, in almost any instance, without first getting the employee’s signed authorization to do so. That is true even if the employee knows that the payment was a mistake.

In the instance where an employee is overpaid and refuses to authorize the deduction from the later paycheck, what can an employer do? The only legal option available is to demand that the employee pay the money back. Obviously, if the employee refuses to do so, the only thing the employer can do is to take the employee to court to recover the overpayment.

Obviously, there are other tools in an employer’s toolbag, such as, dismissal or other discipline, that could incentivize repayment. Even then, however, an employer has to be careful not to underpay minimum wage or overtime in violation of the federal Fair Labor Standars Act.

The lesson is to be careful. Obviously, if an employer has a good relationship with its employees, most employees will be reasonable and not try to take advantage of an honest mistake.