Laws governing payroll processing are set at the state level rather than the federal level, and these laws vary greatly from state to state. If your employer mistakenly underpays you or pays you too much, your state's laws govern the time frame within which your employer must correct the error.
Most states require employers to pay employees on certain days of the month or within a certain time frame after completing a period of work. In the state of Oregon, your employer cannot leave more than 35 days between paydays. In Washington state, paydays are slightly more frequent, as your employer must pay you at least once a month, while employers in California must make payroll at least twice every month. Your employer falls foul of payday laws if you do not get the money that you are due on payday.
If an employer in Oregon fails to pay you your entire paycheck on payday, the employer can wait until the next payday to pay you the rest of the money only if the unpaid sum amounts to less than 5 percent of your total paycheck. For larger sums of money, the employer must correct the error within three business days of the payday on which you were underpaid. In Washington state, your employer has 10 days within which to correct an underpayment; the failure to do so could lead the Department of Labor and Industries to assess penalty fees on the employer.
In the event that your employer disputes your underpayment claim, you can file a claim with your state's department of labor. In Indiana, the state investigates claims involving underpayments of between $30 and $6,000. Smaller claims are dismissed, and you must hire an attorney for a larger claim. It can take 180 days to resolve such a dispute. In Connecticut, an employer that fails to correct a payday error can face a fine of between $200 and $5,000, and a prison term of up to five years.
In Kansas, your employer has the right to deduct from your final paycheck the amount of an overpayment that you received on an earlier paycheck. In Washington state, an employer can correct an overage only if you were paid the wrong hourly rate or if you were paid for working more hours than you actually worked. The employer can deduct your next paycheck to correct the error. However, your employer can make adjustments only if errors are detected within 90 days of the error first occurring. Furthermore, your employer must notify you in writing before correcting the error.