Can an employer require reimbursement for overpayment of wages for 1 year due to its own error?

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Can an employer require reimbursement for overpayment of wages for 1 year due to its own error?

Can they also reduce your wages after 1 year of alleged overpayment due to employer error?

Asked on June 23, 2015 under Employment Labor Law, Massachusetts

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

Whatever the reason for the overpayment was, the employee is responsible for repaying the employer once it is demand. An error does not entitle someone to keep money they didn't earn. It would amount to "unjust enrichment" and a court would not condone such a situation.

That having been said, the employer may not unilaterally take the money out of the employee’s paycheck since that would violate wage and hour laws. However, theemployee could voluntarily allow their employer to deduct the money from a paycheck, and could work out a repayment arrangement as part of the deal (i.e. no lump sum payment). If the employee refuses to agree to this, then the employer may be forced to sue them to recoup the overpayment.

As for your reduction in pay, an employer can set the terms and condions of employment, such as wages, much as it sees fit. Unless some form of actionable discrimination is the reason for the pay decrease or if such a reduction would violate existing company policy, a union agreement or employment contract.


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