The Details:
Oregon has enacted SB 968, effective Jan. 1, 2026, which provides specific guidance to employers regarding the collection of wage overpayments from employees.
Background:
Current Oregon law (ORS 652.610) provides that an employer may not withhold, deduct or divert any portion of an employee’s wages unless one of the following applies:
· The employer is required to do so by law.
· The deductions are voluntarily authorized in writing by the employee.
· Deductions are for the employee’s benefit and are recorded in the employer’s books.
· The employee has voluntarily signed an authorization for a deduction for any other item, provided that the ultimate recipient of the money withheld is not the employer and the deduction is recorded in the employer’s books.
· The deduction is authorized by a collective bargaining agreement to which the employer is a party.
· The deduction is authorized under ORS 18.736.
· The deduction is made from the payment of wages upon termination of employment and is authorized pursuant to a written agreement between the employee and employer for the repayment of a loan made to the employee by the employer.
Effective Jan. 1, 2026, for employees not covered by a collective bargaining agreement, employers may make deductions from wages to recover erroneous overpayments under the following conditions:
· The overpayment must have occurred within the 90 days preceding the deduction.
· The employer must give at least 14 days for the employee to acknowledge the overpayment in writing.
· The employer must provide a written statement with details of the overpayment and the deduction plan, specifying that the deduction will not exceed 10% of the employee’s gross pay per pay period unless the employee agrees to a higher percentage.
· The employee must acknowledge receipt of this information in writing. For employees covered by a collective bargaining agreement, deductions for overpayments are permitted under the terms of the agreement.
Note: The amendments made pursuant to SB 968 apply to collective bargaining agreements entered into, renewed, or extended on or after Jan. 1, 2026.
Next Steps:
Effective Jan. 1, 2026, Oregon employers may begin to utilize the steps provided in SB 968 to collect overpaid wages from their employees.