Can an Employer Deduct Past Overpayments from Your Paycheck

My question involves labor and employment law for the state of: Pennsylvania

I'm paid a base salary + production (percentage of my total production for the month). On multiple occasions, my employer has found production that was erroneously credited to me instead of the business in general for previous pay periods. When this error is discovered, they deduct that amount from my next paycheck, in some cases 6 months later.

I should point out that these overpayments are occurring because of errors of other staff, usually because of confusion on where a particular revenue item should be credited, not because of any error by me. And I understand that this is an overpayment and I have not earned the money. Finally, there is no mention of how to deal with overpayments in my contract.

My questions are:
1. Is it legal to deduct this from my paycheck without my permission or any negotiations regarding how I should pay this back?
2. Does it matter that this is production salary instead of base salary?

Overpayments are just that, overpayments of money you didn't earn and that was not owed to you. It is completely legal for them to take it back, in fact, you should have noticed it and told them to take it back.

It doesn't matter what they call it if you were overpaid they can take it back.

An employer should get your written permission before deducting the overpayments from your paycheck. See the PA Admin. Code, Ch. 34, Sec. 9.1.

But if you raise a stink about it or try to keep money you didn't earn, you can reasonably expect that your employer is going to think twice about whether or not to retain you as an employee.

Which subsection do think requires written authorization of for deduction of wages paid in error? If you go by that law an employee can't deduct for the overpayment of wages. But the US DOL W&HD says this:

Q1) Does the FLSA prohibit an employer from deducting compensation from an employee’s paycheck (without the employee’s permission) in order to reimburse itself for an overpayment inadvertently made to the employee in a previous pay check? The employee requested 75 hours of vacation in pay period one and was paid for them. The employee in fact had only 32 hours available and reported it to the department. When the employee was paid for the next pay period, 43 hours pay were deducted.
A1) It has been our longstanding position that where an employer makes a loan or an advance of wages to an employee, the principal may be deducted from the employee’s earnings even if such deduction cuts into the minimum wage or overtime pay due the employee under the FLSA. An employer may not, however, make an assessment for administrative costs or charge any interest payment that brings the employee below the minimum wage. See Field Operations Handbook, 30c10; opinion letters dated March 20, 1998, and November 16, 1977 (enclosed). Thus the amount the department chooses to recoup in the next pay period is at the department’s discretion. It does not matter whether the deduction was made in the next pay period or several pay periods later.

PayrollGuy --Generally state law can prohibit more than FLSA -- California is a major example of where this is illegal. I don't specifically know PA wage law that MK posted, but some states do require the permission to deduct, even for mistakes. Of course if the employee refuse, like MK says, it could be a career limiting move.

I'm well aware that the state can prohibit more than the FLSA. But the law that was quoted had no mention of deduction for overpayment that I could find. That is why I asked KIA. My reading of the PA law shows it silent on the issue and if so FLSA would be the law that would one would need to be working within.

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Quoting PayrolGuy

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Which subsection do think requires written authorization of for deduction of wages paid in error?

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The code provision defines when deductions are permitted. If it's not listed, it's not permitted.

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Quoting PayrolGuy

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If you go by that law an employee can't deduct for the overpayment of wages. But the US DOL W&HD says this:

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If you go by state law, which is binding on employers within a given state, then it's forbidden. Federal regulations can set a lower standard, or may preempt state law for federal employees working within a state, but they do not make a state's higher standard go away.

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Quoting PayrolGuy

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My reading of the PA law shows it silent on the issue

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The law is not silent on the issue. Under the code provision, no deductions are permitted except as defined by the law.

Then why did you tell the OP "An employer should get your written permission before deducting the overpayments from your paycheck."?

The law you linked mentioned nothing re: deductions for overpayments and I can't imagine that the legislature of the state of PA meant that if an employer accidentally overpaid an employee that was just tough luck for the employer. What if the error were a $100,000 for a minimum wage employee?

As was previously explained to you, the code provision defines when deductions may be made -- and deductions not authorized by the provision are not lawful under state law. The statute explicitly states that an employer can make a deduction with written permission. Thus, if the employer gets written permission to make the deduction, they may do so as authorized by the code based on that written permission. This isn't difficult, is it?

I appreciate everyone taking the time to provide input. It is very helpful.

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Quoting Mr. Knowitall

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An employer should get your written permission before deducting the overpayments from your paycheck. See the PA Admin. Code, Ch. 34, Sec. 9.1.

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Thanks. This gets to the basis of my question. I had one opinion that the employer was to provide notification and get permission. Another opinion was that requirement applied to salary but not bonuses and production pay was more like a bonus.

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Quoting Mr. Knowitall

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But if you raise a stink about it or try to keep money you didn't earn, you can reasonably expect that your employer is going to think twice about whether or not to retain you as an employee.

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Understood and thanks for the advice. Two things my employer and I agree on are (1) this was neither my error nor my responsibility and (2) the money was not mine to keep and must be repaid. Rather the question relates to the exact mechanism whereby the employer recoups the overpayment.

Oh, and we need some staff eduction to prevent this from happening in the future.

The regulation applies to 43 P. S. § 260.3, and for that provision "wages" is defined by 43 P.S. § 260.2a:

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Quoting 43 P.S. § 260.2a. Definitions

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“Wages.” Includes all earnings of an employe, regardless of whether determined on time, task, piece, commission or other method of calculation. The term “wages” also includes fringe benefits or wage supplements whether payable by the employer from his funds or from amounts withheld from the employes' pay by the employer.

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On the basis of what you have stated, additional compensation based upon performance during the pay period would seem to me to fall within that definition; but as they say, the devil is in the details.