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I was overpaid and need some opinions

Posted by on Feb. 4, 2013 at 9:49 PM
  • 19 Replies

 Last paycheck I noticed that I (and several coworkers) were given a bonus for not using sick time when in fact we did use sick time and were not supposed to get the bonus.  I received a letter from my employer that reads as follows:

{Company} has become aware that you were overpaid $150 on pay date 1/25/13.  This money was given in error as an attendance bonus for no sick time used from Sept. to Dec. 2012.  Since you did use sick time during this period, you should have not recieved this bonus.  The net amount after taxes to pay back is $86.59.

You are legally responsible for paying back this amount to {company}.  Please contact John Doe within one week of the date of this letter to make arrangements to pay back this amount.

Failure to reimburse {company} for these overpayments will result in the excess compensation being reported to the IRS as income for tax purposes and could result in further legal action to collect these overpayments.

So here's my questions. 

1) Am I really legally responsible to pay this back?

2) Will this $150 still be reported to the IRS as income if I pay it back or will they negate it somehow?

3) What would happen if I didn't pay it back?

I ask mostly because this type of thing has happened before to some coworkers.  They messed up our pay one summer and over and underpaid some people.  A few were supposed to pay back over $1000 but never paid back the majority of it.  I'm just wondering what my options are.  I live paycheck to paycheck so $86 is a big deal to me right now.

by on Feb. 4, 2013 at 9:49 PM
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by Member on Feb. 4, 2013 at 9:53 PM
Not sure. But it does say about making arrangements. So. If you do have to I would set up a payment arrangement.
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by Ashley on Feb. 5, 2013 at 1:05 AM

I'm not 100% sure. However, I do know companys that have overpaid in the past and actually reversed the deposit right back out of the bank accounts of the people they overpaid. I do believe you are legally responsible to pay it back, but I don't know what the punishment is if you don't. 

I found this for varies by state:

State Law Status

  • Before January 2010, employees in New York State had the right to deduct any wage overpayments from an employee's subsequent paychecks. Such deductions were limited to 10 percent of the employee's gross paycheck amount, until the overpayment was repaid. This was based on the interpretation of New York Labor Law section 193, which regulates deductions from employees' wages. Due to subsequent court decisions, the Department now holds that any such deductions are not permitted by section 193.

Wage Deductions

  • Section 193 states that permitted deductions from wages are those that are required by law, such as taxes and social security plus deductions that are expressly authorized in writing by the employee and are for the benefit of the employee. The statute gives examples including health insurance premiums, pension contributions and union dues. The Department's prior reasoning was that a voluntary agreement to repay a wage overpayment by subsequent paycheck deductions was for the benefit of the employee, who otherwise could be sued by the employer. Now, the Department holds that only separate, voluntary repayments will be allowed or those obtained by a court judgment against the employee.

Voluntary Repayment

  • The state's Department of Labor also holds that section 193 does not permit the employer to enter into a separate repayment agreement with the employee to repay the overpaid wages. This is the case even if the employee requests such an agreement. The employer is not allowed to threaten or actually take any punitive or retaliatory actions against the employee regarding the wage overpayment and must disclose this regulation to the employee. However, the Department does acknowledge the employer's right to sue to recover the overpayment. Such action will not constitute retaliatory action.

Possible Employer Actions

  • The Department's January 2010 opinion letter basically leaves an employer with two ways to legally recover an overpayment of wages: fully voluntary repayment/s from the employee or suing the employee for a judgment, without taking any other negative actions against the employee. Labor lawyers have suggested that employers have the employee sign an acknowledgment of the overpayment and that they were requested to voluntarily repay it and are subject to being sued, with no other negative measures legally permitted.

Read more: Recovery of Wage Overpayment in New York |
by on Feb. 5, 2013 at 8:40 AM

Yeah... give it back. Didn't you know that you shouldn't have gotten it?

by Bronze Member on Feb. 5, 2013 at 9:16 AM
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1) Yes. I believe so. If you have direct deposit, they can take it back directly out of your account.

2) If you pay it back, no they will not report it to the IRS. They may have to issue you a corrected W-2.

3) It sounds like they are trying to be nice about it. If you don't pay it back, they can deduct the amount from a future check.

by Group Admin on Feb. 5, 2013 at 9:49 AM
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Yes, you are responsible to pay it back.  It will not be reported if you pay it back.  You could see the amount be taken out of a future check.  I do payroll, and if an error occurs, we try to do right by the employee and set up a payment arrangement, where we only take a portion for a few pay periods.

by on Feb. 5, 2013 at 10:04 AM

I believe you are legally required to pay it back. Sucks, though! 

by Group Admin on Feb. 5, 2013 at 10:49 AM


It does suck - on a slightly different situation, we were paid a check of around $600 from our insurance company.  Unfortunately, it was as a result of an injury DH suffered at work and which was fully paid already by workmen's comp.  I don't even know how our insurance company got wind of it, but they thought we paid out of pocket and were reimbursing us.  It REALLY hurt ripping that check up - but we didn't deserve that money so we couldn't keep it.

Quoting mickstinator:

I believe you are legally required to pay it back. Sucks, though! 

by Melissa on Feb. 5, 2013 at 10:53 AM

That sucks but you are responisible to pay it back. A friend of mine just switched companies (same job) and originally they were going to pay them for working the holiday but decided later that they weren't going to. She ended up not getting a check after they "fixed" everything.

by on Feb. 5, 2013 at 10:54 AM

I have heard of cases when utility companies accidentally undercharge customers for long periods of time. The customers have to make up the payments later, too. 

by Tracy on Feb. 5, 2013 at 10:59 AM
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Thanks girls. I figured I should pay it back but wasn't sure the legalities of it. Plus I want to make sure if I give it back, it's taken off my w2 come next year. I knew right away I shouldn't have gotten it so I do have some of it left. The rest, they can get in a month or so. I'm in no hurry lol
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