IfI was mistakenly paid the wrong salary and it will be decreased immediately, shouldI also have to pay retroactive restitution for someone else’s error?

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IfI was mistakenly paid the wrong salary and it will be decreased immediately, shouldI also have to pay retroactive restitution for someone else’s error?

I am a non-union city employee. I was offered a position at $20 per hour 11 months ago. Apparently all city employees in all positions received a 10% pay decrease. My position, however, when offered to me was not published with the correct 10% decrease. Now they are saying do to their clerical error I have been paid more than I should have and the correct 10% decrease is immediate and I will owe retroactive pay for this time. Is the retroactive pay legal? I understand the 10% decrease but why should I pay restitution for someone else’s error?

Asked on December 21, 2011 under Employment Labor Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

There are two different kinds of overpayment of salary or wages:

1) A mathematical error--somone was issued too large a check, or two checks, or deductions were not taken out, etc. Related to this is an administratrive error where the employee had notice of his or her correct salary, but for some reason, the employer paid at a higher rate. (That is, the employee received a larger check than he or she expected.)  In these cases, the error is obvoius--math was done incorrectly; or the wrong check was issued in contravention of the agreed-upon salary--and in this case, the employer may seek restitution.

2) A policy or decision making error, where the employer could have and should have offered the job at a lower salary, but for some reason did not. In this case, a valid agreement was formed between the employer and the employee for salary at $X per year. The fact that the employer erred and offered too high a salary does not let the employer recover the "overpaid" wages any more than a homeowner can recover the amount he overpaid for his home if he realizes he could have offered less. As long as an offer was made for $X and accepted for $X, the employer had to pay $X, at least until it chooses, going forward, to reduce the salary.

From what you write, this is the second situation: you were not paid more than you were supposed to be paid, but were paid what you were told you'd be paid. The fact that the employer could have or should have gotten you to work for less is not your problem or your responsibility; so as long as  you were being paid at the rate you accepted the job for, there would seem to be no basis for the employer to recover the salary.


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