If an employer accidentally pays an employee too much, what are the laws of repayment?

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If an employer accidentally pays an employee too much, what are the laws of repayment?

The employee was paid too much over a 6 month period. She was only with the company for 1 month when the overpayment started and wasn’t certain of her biweekly amount. When she saw she was receiving 2 direct deposits, she alerted her boss and the head of accounts. The head of accounts told her the money was the correct amount and the 2 sums would eventually merge into 1 deposit. 6 months later, the employee is being asked to repay $17k. The employee just signed a lease for an apartment that she will not be able to afford and will need to abandon her lease and incur costs assocociation with this.

Asked on January 24, 2012 under Employment Labor Law, New York

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If she was overpaid by mistake--i.e. the employer can show both what she was supposed to be paid, and what she in fact received--she has to return the money. A mistake does not entitle someone to keep money they received in error; just as, if she had been underpaid by mistake, the employer would have to make good the shortfall, so does the employee have to return the amount by which she was overpaid. She should probably try to work out a payment plan or schedule with the employer, so she can repay over time.


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