Q: We had a payroll issue and accidentally overpaid an employee quite a bit. Can we simply withhold from their future paychecks?
A: Deductions from wages are typically governed by Iowa Code 91A. Iowa Code 91A indicates that employers should not withhold wages except under specific circumstances. Further, it specifically indicates that certain things may not be deducted from wages such as cash shortages in a common money till, losses due to breakage, damage or similar items, and lost or stolen property, except under very specific circumstances.
However, the statute does not fully address issues of overpayment. In general, for any deduction from payroll, to avoid potential questions or issues, it is preferable to have an agreement signed by the employee specifically allowing deductions from payroll. Documentation of this type can be obtained during the hiring process but reference overpayments to make sure you have no future issues. If you did not obtain this information during the hiring process, you can seek an agreement from the employee when the overpayment is discovered.