What is the law if my employer overpaid into my 401k?

My employer over contributed to my 401k by $1900, which is money I can’t touch and I didn’t

notice. Now they are garnishing my out of pocket money to repay for their mistake.

Asked on March 29, 2019 under Employment Labor Law, Michigan

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 1 year ago | Contributor

The law is very clear that a mistaken overpayment does not entitle you to keep the money: it must be returned or repaid. If you can't take the money back out of the 401, you will have to repay it otherwise. 
The employer should not have garnisherd your wages without your consent, however: employee wages may not be deducted or withheld without either consent or a court order. That said, you should most likely not complain and allow them to do this: if you took legal action to force them to stop and even get the garnished wages back, they in turn can and almost certainly will sue or countersue you for the overpayment, so you'll end up having to repay it anyway. Better to just let them take the overpayment out of your wages then go to the trouble and cost of a legal action that still result in the end in you paying the same amount.


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