2. Deductions for overpayments are limited to 12.5 percent of the gross wages (provided the deduction does not reduce wages below the minimum wage rate). The employer shall provide the employee with notice of the intent to commence the deductions to recover the overpayment.This model letter as a legally approved form for a client to use when informing an employee about correcting a wage overpayment. If you pay an employee more than they should have received in a pay period, you need to know how to correct a payroll overpayment. The salary overpayment resulted because . This policy sets forth the procedures for wage deductions to recover overpayments made due to mathematical or other clerical error. When addressing the overpayment of wages, it's best practice to notify the employee in writing. The Employee must fill out the ED Repayments Form (Appendix.