What are my legal right regarding an alleged overpayment of my salary?

Question Details:

Before my maternity leave a little over a year ago, my boss and I agreed that I would return to work at a reduced schedule of 30 hours per week. Compensation was not discussed at that time. When I returned to work 2 months later my boss gave me a document that stated my prior year's salary, plus my merit increase and my new salary going forward. No where does it reference 30 hours vs. 40 hours per week. Today my boss told me that I have been overpaid since that time; HR has been paying me for 40 instead of 30 hours weekly and I will have to repay. My pay stub doesn't reference hours worked and matches the compensation document that I was given.

Asked 2/8/2012 under Employment and Labor | 32 View(s) | More Legal Topics

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Employment and Labor Law Answers

When an overpayment is an error, in the sense that there is a clear agreement between the employer and employee, as to what pay should be, but the employee accidentally receives too much (more than the agreed-upon rate or salary, or for more hours than actually worked), the employee must repay the overpayment.

In your case, the critical issue is whether you are an hourly or salaried employee.

If you were an hourly employee, then you should be paid at the agreed hourly rate for the hours actually worked. Therefore, if you are an hourly employee, you actually worked 30 hours weekly, but were paid for 40 hours, there is a clear overpayment--you were paid in error for more than the work you actually did--and you must repay the extra.

However, if you were a salaried employee, the number of hours does not matter--you are paid a weekly salary for  your job, regardless of whether you work 30, 40, or 50 hours, for example. In that case, if whaht you were paid matches the agreement then in force between you and the employer, then there is no "overpayment" even if, in retrospect, the employer wishes he'd paid you less. From what you write, the amount you were paid matches your compensation documents: therefore, if you were a salaried employee, it would seem you were paid correctly (no overpayment), even if the employer had contemplated reducing your pay. In this case, you would not have to return the money.

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