KBS Reference Desk: Over-Payment Withholding

Q:    An employee was voluntarily reassigned to a position with a lower daily rate. Payroll implemented the salary change one month late resulting in the employee being overpaid. Can payroll deduct the over-payment from the employee’s check next pay period? 

A:    Yes, but payroll may only withhold the over-payment from the employee’s pay check with written authorization from the employee. 

If your district utilizes standard TASB contracts, it states “you agree that the district may deduct any over-payments under this Contract from one or more of your paychecks.” This language complies with the Texas Payday Law and is sufficient consent from the employee to apply the deduction.

If your district’s employment contracts do not provide for withholding and the employee has not signed an authorization to withhold for overpayment, then the district should request the employee return the funds owed in writing specifying the amount owed and a deadline to respond. Failure to return the overpayment is a violation of the Educator Code of Ethics, and grounds for both separation of employment and criminal penalties. 

In order to avoid this concern in the future, all employee contracts should incorporate the above identified contact language.

At-will employees or employees already under contract without the above language should sign a wage deduction authorization agreement at the initiation of each school year that states, “I acknowledge that any wage over-payment constitutes an advance of future wages payable to me, and I give permission to the district to deduct any wage over-payments in full from any subsequent paycheck(s) to which I become entitled until the overpaid amount has been fully repaid.” 

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