First, I'm an hourly employee-non-exempt.

In addition to my regular hours, I was over paid 40 additional hours in error. I informed my employer immediately and was told that my next check would be reduced by 40 hours in order to recoupe the amount over paid.

I didn't have a problem with this but then another employee told me that this is not permitted under State and/or Federal law. Especially if it were to reduce my wages below minium wage, which it didnt. That this is now considered a debt and they cannot garnish my wages to collect the debt.

Another employee told me they could recoupe the wages if I permit them to do so in writting.

This is all too confusing. I don't want to be in debt and I don't want to be on bad terms with my employer.....who's correct?

Unless AZ law is quite different from other states with which I am familiar, if you truly were overpaid they can legally deduct the excess wages from subsequent checks as long as you are not brought below minimum wage times the number of hours you work.

Check with your state DOL regarding any state laws that might apply.