In November officials clamped down on any contact with the head or neck area.
Young's comments came after Wasps debutant Kurtley Beale was shown a yellow card in their European Champions Cup win against Connacht on Sunday.
"Player welfare is huge and we are 100% behind that," he told BBC Radio 5 live. "But we have to decide whether we play touch rugby or contact."
"There is no way that was a yellow card. It is starting to get a bit of a joke really."
Beale was sent to the sin-bin despite Connacht's Niyi Adeolokun ducking into the challenge.
"I don't want to play down the player safety element, but we can't go overboard with it," added Young.
"Anything above the nipple area at the moment seems to be a yellow card, which is taking some things away from the game."
England head coach Eddie Jones is among those who have argued that foul play should be judged on the action rather than the outcome.
His comments came after England wing Elliot Daly was sent off in the 27-14 win against Argentina for a tackle on number eight Leonardo Senatore who landed on his neck.
And director of rugby Young says the Wasps management team have started to coach differently as a result of the crackdown from referees.
"We are talking all the time about lowering our sights and not giving the referee an option to give these penalties," he continued.
"Everyone wants to look after players, but you have to be careful it doesn't go too far."
Beale himself says players are conscious of the way the game is being officiated.
"They are cracking down on contact with the head, and obviously player welfare is extremely important in our game," said the Australia international centre.
"There was no intent to make contact with the head, but I was a bit lazy there and he has great feet, and it didn't go right for me. I am happy to cop it."
The 27-year-old marked his debut for the Premiership club with a try with his first touch, and was relieved to return to action after seven months out with a knee injury.
"It was a special moment for me to be able to play for my new club," he added. "It was just a great day. The try was the icing on the cake."
The officiating of high tackles in rugby is starting to become "a bit of a joke", says Wasps boss Dai Young.