Can an employer reclaim wages from an employee without the employee’so consent?

The employer erred and overpaid wages. They now want to reclaim those wages. What is the law regarding this here and does it differ in other states? The company has stores and employs people in all 50 states.

Asked on May 7, 2016 under Employment Labor Law, Alabama

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

No, the employer may not "reclaim" wages from an employee, either by taking them out of the employee's bank account or by reducing future wages, without the employee's consent. (With one exception: if there is a check or direct deposit which has not settled yet and which is for the wrong amount, they can cancel it and replace it with the right amount.)
But that does not mean the employee can keep an overpayment: the law is very clear that if someone is paid extra due to some administrative, technical, or even plain human error, that the person has to return the money--a mistake gives no right or entitlement to funds. If the employee does not return the money voluntarily, the employer has the right to file a lawsuit for the funds. If the employer can prove the overpayment in court, they can get a court judgment--an order--requiring repayment. And if wages truly were overpaid--i.e. the employee was accidently paid more than he/she was entitled to given his/her then-current wages or salary and the hours or days worked--the employer will win that lawsuit.
So while the employer cannot simply take the money back unless the employee lets them, they could sue and get the money that way.
Also, unless the employee has an employment contract which by its terms would prevent them from being terminated in these circumstances, an employer could certainly terminate the employee for being unwilling to return money to which he/she is not entitled.


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