Here’s a real headbanger! As a result of a NYS Court of Appeals decision in the Labor Ready case, New York State employers may no longer adjust an employee paycheck overpayment in the next employee paycheck. To do so would now violate section 193 of the state labor law regulating paycheck deductions. I’ve read a January 2010 Request for Opinion letter from the department of labor’s Counsel’s office that clearly states while it was permissible in the past to correct overpayments in paychecks as long as the amount didn’t exceed 10% of gross wages, this court case changes everything.

So what are employer options? While a paycheck deduction is now not permitted for pay overages, employers may ask employees to voluntarily repay them for the pay overage. The employer cannot threaten or imply retaliation of any kind if the employee refuses to voluntarily repay the overage. If the employee declines to voluntarily repay the overage, the employer may pursue repayment through court action. Thinking that Small Claims Court was an option, I checked the NYS Small Claims Manual and read that corporations, partnerships, associations or assignees could not use small claims courts. So, it looks like regular civil court if the employee refuses to do what’s right and return the pay overpayment. Good luck!