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After leaving a company I was paid 4 additional paychecks. My previous employer is now asking for the funds back and I do not have the funds to pay. They say I have about 45 days to pay or they will file a civil suit.

The overpayment was due to a payroll error. I told them that I did not notice the funds until I was informed by them and I am not able to repay in that amount of time. What do I do?

Michael A
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user43238
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    Where in the world are you? Laws and procedures vary. – user52889 Oct 23 '15 at 21:26
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    No idea where you are, but I'm in California. It appears in California a company may not collect upon overpaid wages. http://www.shrm.org/templatestools/hrqa/pages/california-wageoverpayments.aspx – Phil Oct 23 '15 at 21:45
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    But is it still wages if you are not employed anymore? I can fully understand this during employment if the overpayment is not that high that you had to notice it - you would have assumed that you got the correct salary, and if the real salary was lower, you would have looked for another job. But after leaving, your expectation should have been to receive zero. – gnasher729 Oct 23 '15 at 23:48
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    Possible duplicate of My former employer is still paying me. What do I do? – mcknz Oct 24 '15 at 18:16
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    This sounds like a total BS. I can understand if you have 200k in a bank account and you missed 10k, because it is not a big deal for you, but if you are so tight on budget, that you can not pay the money back, it is almost impossible that you missed 4 paychecks. – Salvador Dali Oct 25 '15 at 04:17
  • @SalvadorDali - one thing to note is that the OP may have been paid weekly, in which case 1/4 or 1/5th of a monthly salary may not be easily noticed. Also that the OP may not have understood whether they were paid in advance/arrears, and therefore expected their last paycheck a week or two after finishing (or at least, wouldn't have been surprised to find that the case). Equally if they went from a lower paid job to a higher paid one, or relocatedand changed their expense levels the paycheck may have been a small enough amount (particularly weekly) to slip notice. Not the same as 4x monthly! – Jon Story Oct 26 '15 at 14:52

2 Answers2

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The company is now asking for the funds back and I do not have the funds to pay

You received 4 extra unexpected paychecks worth of funds that you weren't entitled to. The money must be somewhere that it wasn't planned to be.

I told them that I did not notice the funds until I was informed by them and I am not able to repay in that amount of time. What do I do?

Arrange a payment schedule, where you can repay the funds that are owed over time. That will likely prevent a lawsuit, and give you a way to pay them back.

Joe Strazzere
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    Agreed, arranging a payment schedule is the standard way of resolving a situation like this. Anything other than that (such as whether the employee is legally required to repay after X amount of time) is a question for a lawyer. – Lilienthal Oct 24 '15 at 11:21
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    Talk to a real lawyer (not someone pretending to be one on the internet) they should be able to definitively tell you if you're legally required to repay the money. If yes, then you can negotiate a payment schedule. If not, you can decide if you want to tell them to stuff it or if you want to pay them back. – DLS3141 Nov 16 '15 at 13:16
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    A payment plan is your only alternative. The money is theirs, and you spent it. If it ends up in court, you will lose, and will probably have to pay their legal fees – Dan Shaffer Nov 17 '15 at 17:07
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Normally, if a payment is made by legitimate mistake, there is a fundamental right to recover the money. But, if the person receiving the money can show that they changed their position detrimentally in reliance on the belief that they were entitled to that money, they have a partial defense and are entitled to keep the money but only to the extent their position changes. An example of this would be if you were denied unemployment benefits because of the extra funds and had to use this money in order to sustain your lifestyle (An Australian example can be found here).

That said - wages are a payment for time worked. You have done nothing to earn this money and ethically, and very likely legally speaking you are expected to pay the money back. If this were to go as far as a civil suit you are going to have to try very hard to defend your position. This is going to cost you time and more than likely money and reputation - is it really worth it?

You need to accept that they made a mistake in paying you the money and you made a mistake in not questioning the extra funds in your account. I would either pay them back immediately or follow Joe's advice above and arrange a payment schedule.

Michael A
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    I think the "reliance" would happen if lets say the company told you that they owed you four months of salary, paid the salary, and then asked for it back. A worse situation would be if they paid your four months salary, you didn't receive unemployment benefits because of that payment, they ask for the money back, and you can't get the unemployment benefits either since you should have asked for them right away. That would be quite bad for the company. In this case, receiving a paycheck without any logical reason other than an error on the company's side, that argument won't work. – gnasher729 Nov 16 '15 at 15:15