Overpaid employees—guidance for future wage deductions

If you accidentally overpaid an employee and it’s too late to initiate a reversal, you may be able to correct the error by simply reducing (deducting) the employee’s gross wages on future payrolls. 

  1. Check to see if you can still cancel or reverse the payment.
  2. If it's too late to reverse the payroll, you can consider reducing their gross wages on an upcoming payroll.

In some cases, you may need to get money back for a non-taxable expense or reimbursement paid to an employee—to do so, set up a post-tax deduction for the employee on their next payroll. 

If you need further help, reach out to us through the Help or Priority support section of your account.

Manually reduce wages on the next payroll, or the current one if it can still be adjusted

On the first page of a payroll run, you can manually adjust an employee's gross wages to adjust for any previously overpaid wages.


Before you consider reducing wages on future payrolls, the amount you want to deduct must be a result of an accidental overpayment (e.g. a mathematical or clerical error), and there can’t be any dispute over whether the employee is actually owed those wages.

To reduce gross wages during the payroll run:

  1. Head to the Payroll section and click Run Payroll.
  2. Click Run Regular Payroll.
  3. Adjust the total wages in the “Gross Pay” column by editing the hours worked in the “Regular hours” column. You may also be able to edit the gross pay directly—how to update wages is dependent on how an individual's compensation was set up.

Staying compliant

As with many laws affecting employees, if the state law is more restrictive than the federal law, the employer must follow the law that protects the employee’s rights.

Considerations to make before deducting overpaid wages from subsequent paychecks: