What is the law regarding an employer who states that an employee was overpaid their salary due to a typo in the contract but it’s been over a year?

I have a co-worker who is being told she was overpaid for the past year and owed the district approximately $5000. They are stating that her initial contract, that was signed over 1 year ago by both parties, had the incorrect salary on it and she now owes back pay. Given that she signed a contract and the salary was explicitly stated, is there any validity to their claim? It seems like they may be trying to pressure her to sign a document, which may modify the original contract.

Asked on September 22, 2017 under Employment Labor Law, Colorado


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

If her contract set her wage/salary, then she was NOT overpaid  *unless* it was known and clear to both parties (employer and employee) that the salary was lower and that the contract definitely contained a typo. For example, say that all correspondence leading up to the contract stated clearly that the salary was $50k, but the contract contained $55k--IF the evidence is strong that *both* sides knew what the correct salary was and someone just mistyped (in this example, keyed an extra "5"), then the employer may be able to recover the money. This is because a contract gives effect to the agreement of the parties, so if the parties had in fact agreed to a different salary, a court would reform the contract to reflect their actual agreement as to how much she should have been paid.
But the evidence would have to be strong that both employer and employee had agreed to a different, lower number: if there are grounds that your co-worker could have legitimately and in good-faith believed that the contract salary was correct, the employer cannot after-the-fact decide that it paid too much; if they led her to believe or let her believe that her salary was correct, they are bound to what is in the contract.

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