If someone is overpaid, they get more money for the job than people think that job is worth — more than they “deserve.” We say it of a person (he is overpaid) or of the pay itself. It is a complaint word, not a bank word: fans say footballers are overpaid; staff say the boss is overpaid. Though actually, “deserve” is the messy part. Almost nobody agrees what someone should earn, so overpaid is a judgment, not a fact you can measure with a ruler. The verb is overpay. That verb has a quieter second life: you can overpay a bill by accident, sending more money than you owed. That is a mistake with numbers, not a claim that someone is paid too well. The sense here is the first one — pay that people think is too high for the work.