If a former employer overpaid me for my moving expenses, what can happen if I don’t return the money?

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If a former employer overpaid me for my moving expenses, what can happen if I don’t return the money?

My previous company paid me moving expenses ($7000 ) and covered taxes, so I could receive exactly $7000. They miscalculated taxes which was significantly less, and instead of $7000 I received $9200. Now, after I quit the company they are demanding from me to return this difference of $2200 to them. Can there be any legal consequences, or can they report me to the collection agency and damage my credit score if I do not return $2200 to them?

Asked on July 12, 2011 under Bankruptcy Law, New York

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

If they overpaid--that is, they paid more than they were supposed to--you have to return the money; a mathematical or administrative mistake does *not* entitle you to keep the money. (Consider: if they miscalculated, but the calculation went against you, once you discovered the error, they'd have to pay the extra  money--the fact that they made an error would not entitle them to not pay you everything you are entitled to.) Since you do not have a right to the extra money, if you do not repay it, they could take action against you: e.g. they could sue you. Then if they get a judgment against you, that will injure your credit rating. Since it was their error, they can't try to charge you interest or penalties, and they should be willing to work with you to come to a mutually acceptable payment schedule.


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