Can a Texas employer legally take back overpaid wages? Here’s what the law says
Getting paid too much might sound like a good problem to have, until your employer asks for the money back.
That question is now playing out in Dallas, where the city is suing a former firefighter over more than $127,000 in alleged overpayments after his resignation in 2023, according to the Star-Telegram’s news partner WFAA.
Officials claim the payments continued for nearly two years because the firefighter’s separation paperwork was never fully processed through the payroll system.
But the case raises questions that could apply far beyond City Hall. If your employer accidentally overpays you, can they legally demand the money back?
And if they can, are they allowed to take it directly from your paycheck?
Here’s what Texas law says.
Can a Texas employer legally demand repayment if they overpaid you?
Wage overpayments are treated similarly to wage advances or loans, according to the Texas Workforce Commission, so employers can generally recover money paid by mistake.
That can include situations where an employee continued receiving pay after leaving a job, was paid the wrong salary, or was accidentally paid for time they didn’t actually work.
“However, the Texas Payday Law requires such deductions to be authorized in writing by the employee in order to be valid,” the Texas Guidebook for Employers states.
Those written authorization agreements are often included in onboarding paperwork, payroll forms or employee handbook acknowledgements employees sign when hired.
If the worker no longer works for the company, employers may need to recover the money another way, including through repayment agreements or lawsuits.
What should I do if my employer says I was overpaid?
If you were told you were overpaid, you may want to review any paperwork you signed when you were hired, since Texas workforce guidance says employers need written permission before taking money out of your paycheck.
Pay stubs and bank records may also help you compare what you were paid against what you were supposed to earn, especially in situations involving overtime calculations or duplicate deposits.
If the amount is disputed, you can ask employers for documentation showing how the overpayment happened and how the repayment amount was calculated.
Payroll records, overtime calculations and direct deposit histories can all become important if there’s a disagreement over how much money was actually overpaid.
