Does my former employer have any legal recourse to claw back money from me?

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Does my former employer have any legal recourse to claw back money from me?

I was employed as a salesperson and received a base salary with commissions on sales. Approximately 6 months ago, my company let me go. I signed a separation of employment where I received severance and submitted my last expenses. In the document, it said we are separated and I will not attempt to get more money from them at that point. A couple weeks later, I received a call that they had overpaid me around $4000 (a commission they supposedly paid twice) about a month before I was let go and they wanted me to pay it back. At that point I had already paid taxes on it. They calculated that after paying taxes on it I’d owe them about $2k.

Asked on October 11, 2012 under Employment Labor Law, New York

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

If you were in fact overpaid--double paid a commission, for example, or otherwise paid more than the amount to which you were entitled--you have to return it: the company's error in overpaying you does not entitle you to keep the money, any more than they'd be allowed to keep the money if they had accidentally underpaid you. If you do not return it, they could sue you for it.

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

If there was truly a mistake in the amount of your severance and other payments that you received when you ended your employment with your former employer then under the laws of all states in this country you are legally obligated to retrun to your former employer what you are not entitled to.

Assuming you return the $4,000 you will have to amend your tax returns as a result of the overpayment once you confirm that you in fact received an overpayment.


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