Updated: Feb 10
Despite your best efforts and all of the automated technology you have in place, you made an "oops" when you ran payroll. Perhaps you looked at the wrong line in the employee spreadsheet or were distracted when you hit the "Pay" button. Now you have to notify your employee of the error.
That's okay. You can quickly rectify the issue with a simple letter. Using a template to create an employee overpayment letter makes this an easy fix.
What is an overpayment letter to an employee?
An overpayment notice is a short letter or form you send to an employee. This will prompt them to acknowledge that they understand the accidental overpayment, which typically occurs because regular wages were figured incorrectly.
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When is an overpayment letter sample used?
Aside from a miscalculation of regular wages, you might need to send an overpayment letter for a variety of other reasons, such as:
Insufficient tax withholding — if an employee has a change in circumstances or employment status and needs more money withheld from their taxes.
Wage garnishment — when you receive a wage garnishment letter for an employee. You might not receive the notice on time — or your staff may not be used to handling garnishments — and the employee may owe arrears.
Incorrect bonus payment — perhaps your employee earned a bonus during a particular pay period, but you paid them more than the amount they were entitled to.
PTO cashed out mistake — did an employee request to cash out PTO, and you paid out too much? That's a perfect time to use this type of letter.
Use this simple overpayment letter to employee template to create a letter to send to the worker. The worker will complete their portion (the signature and date) and return it to you. You can send the overpayment letter to your employee through regular mail or email.
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Overpayment letter to employee template for immediate use
NOTICE OF EMPLOYEE OVERPAYMENT
Employee Name: Employee First and Last name
You are receiving this letter because an overpayment has been issued to you in the amount of $XXXX.XX due to: (State Reason Here). Please sign, date, and return the form below within X days.
EMPLOYEE ACKNOWLEDGMENT OF OVERPAYMENT/AUTHORIZATION TO REDUCE WAGES
I have been notified of an overpayment in the net amount of $XXXX.XX from Company Name. I agree that an overpayment has occurred, and I knowingly and without coercion waive my right to dispute the overpayment. I agree to allow my wages to be garnished for $XXXX.XX per paycheck until the entire amount has been repaid.
Employee Signature________________________ Date_________________________
Best practices for delivering an overpayment letter to employees
Obviously, you'll want to begin this process as soon as you determine that an employee has been overpaid.
Send the letter as quickly as possible. Giving your employee an explanation as soon as the error occurs will clear up any confusion.
Determine how you will remedy the situation. The easiest way to do this is by withholding more pay in the next pay period.
Be forthright as to the reasoning. State the reason for the overpayment clearly in the letter.
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