Clerical Overpayment

CPPL · April 2003

[font size="1" color="#FF0000"]LAST EDITED ON 04-11-03 AT 09:27AM (CST)[/font][p]Payroll staff in my company made a clerical error which resulted in an employee being paid almost $4.00 more dollars an hour. This employee signed two pieces of paper prior to her employment stating her correct hourly rate. Six months had passed before the error was found which resulted in an $1800 overpayment. In my mind, it is simple. I correct underages, therefore, an employee should pay back overages. The employee was told to payback the overage. That employee flat out refused and said that it was our mistake. Do we have legal power to require her to pay back the overage? Any input is appreciated.

LindaS · April 2003

This is something that has been covered in previous posts but an overpayment on a payroll check is akin to an overage at the bank. If a mistake is made and the person received more money than they should have, they are responsible to pay it back. It appears that she knew she was being overpaid and chose not to say anything about it. This type of behavior is, in my book, theft and should be handled as such. I would sit the employee down, explain the situation and explain how the overage is going to be rectified (she is going to have to pay it back). If she continues to refuse, explain that she may be terminated for theft.

Parabeagle · April 2003

I don't think the issue is whose fault it was. Overpayments need to be recouped and I am not aware of any law that prevents repayment in a situation such as this one (though I could be wrong). When I was in the military, overpayments that occur when changing station, changing rank, etc. were pretty common and we were responsible for paying them back even though they were not our fault.

jimlegal · April 2003

You have the absolute right to receover the overpaid monies. From your post is sounds like the parties knew what the hourly rate would be, and agreed to that rate. Again, from your post it sounds like the parties may have been operating under the doctrine of "mutual mistake"! I would write a letter demanding return of the over paid monies. If the employee did not respond or ignored the initial demand, I would have our company attorney file a lawsuit to recover the over paid monies, plus costs and attorney fees. Upon receiving a judgment you then could garnish the employees wages at their new job! Of course garnishment of employment wages is not available in all states. Wish you well with your situation.

MaryAnn_SHP · April 2003

Is it possible that the way you approached the employee to advise her of the payroll error has caused you some problems in her willingness to return the monies? I would suggest that you approach her again giving her the option of returning the $1800 over the same period that you overpaid her (i.e. 6 months). Her repayment would then be divided by the number of paychecks she was actually overpaid and spread out in a more acceptable repayment schedule. I would suggest that you don't give her the option of no repayment and tell her you have no recourse but to recoop the overpaid monies, but give her the choice of just how she would like it to be repaid (i.e. lump sum, spread out over a certain number of paychecks that she would choose (but in no case would exceed the 6-month repayment schedule) or finally, in equal installments paid out over the same number of payperiods that the overpayment occured. Good Luck! This potentially could cause reprecussions among you other employees if this isn't handled consistent with past practices. (I am assuming that your past practice has been to recoop overpaid monies.) I would also suggest that you might institute a quarterly payroll check to assure that your employees are being paid the correct amount.

Pork · April 2003

DON'T FEEL BAD, WE MADE A $38,000.00 ERROR AND QUALITY CONTROL SYSTEMS LIKE ME SIGNING THE CHECKS AND CHECKING THE AMOUNT DID NOT CATCH THE ERROR. My mind was out in "left field" as I ruber stamped the direct deposit check. The money was transferred and a smart bank teller called to check on the correct sum she was about to allow to be deposited into a checking account. The call went to the supervisor in the receiving bank, to the corporate controller in NC, to the accounting manager, to the General Manager, to me, and finally to my ASSISTANT HR/PAYROLL SPECIALIST. Would you believe i do not sign 200 pay checks each week without checking every one. Of course, you can get back the money, but it was not the employee's fault, he would have gotten the money; but it certainly would have been his fault if he had received the money and jumped at the opportunity to spend the money. How to get it back if spent is another issue! Lump sum if the money is there, time payback, or termination and probably never get your money back, one can not get "blood" out of a turnip!

BUT GET IT BACK!!! PORK

JudyRoy · May 2003

We too made a clerical error and paid an employee $28,000. We caught the error immediately and tried to put a stop payment on the check. However, this employee was clever and cashed the check at our bank and then deposited the money in her account with 10 minutes of picking up the check at our office. Payday was on Friday; by Monday the money was gone. Spent! We withheld the following two checks that were due her and filed suit to recoup the balance. She finally paid back some. In the end she was discharged still owing us $4,000 which we were reimbursed under our insurance policy. They are now handling the case as "employee misappropriation of funds". For overpayments such as yours, I would try and make a repayment schedule as the employee may not have realized she was being overpaid. I have found that usually the attitude is that they have already gotten the money and most feel they are not obligated to pay it back.

Clerical Overpayment

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