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Barrister
Barrister, Lawyer
Category: Employment Law
Satisfied Customers: 22564
Experience:  14 years practicing attorney
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An employee (non-exempt) was overpaid approx. $12K the error

Customer Question

An employee (non-exempt) was overpaid approx. $12K the error was due to human error (keying in an incorrect hourly rate.) The employee was told the pay rate had been corrected. The employee stressed about the whole situation reluctantly signed an agreement to pay the money back via pay roll deduction for a # XXXXX years. employer just notified employee that they never corrected the initial problem and the employee owes an additional $8K. The original agreement included a payment term and if for any reason the employee leaves employer the employee must pay the debt in full. What rights does the employee have to these numerous human errors? What is the employer's liability in all this, if any? Does the employee have any type of legal case against the employer? The employer is a municipality in Texas.
Submitted: 1 year ago.
Category: Employment Law
Expert:  Barrister replied 1 year ago.
Hello and thank you for using JA! My goal is to provide you with excellent service and help with your legal problem.
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Did the employee know what their hourly wages or salary was supposed to be?
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If so, did the employee notice that their pay was higher than is should have been?
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If not, under what circumstances was the employee hired where they weren't told what their pay was?
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Does the employee acknowledge that they were overpaid through the clerical error?
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Thanks
Barrister
Customer: replied 1 year ago.

Yearly salary was known. from day one employee worked a lot of overtime, thus, bi-weekly pay was not consistent. Pay stub was not viewed until notified of error (several months after starting work) and at which time was told the correction will take place immediately. O/T stopped and paycheck was lower - employee did not verify if correction had taken place since pay was lower. Payroll supervisor verbally confirmed (3 times) during a meeting with the employee and the employee's supervisor. Everyone involved included HR noted that the correcting was taking place immediately. There was no reason to doubt the payroll supervisor or HR.

Expert:  Barrister replied 1 year ago.
Thank you for the additional information. Although the employee is completely blameless in this situation, they can be forced to repay the money under the theory of "unjust enrichment" and "mistake". Both of these legal doctrines essentially state that if someone receives a benefit that they aren't legally entitled to because of a mistake of the other party, they can be forced to return or repay the benefit that they received.
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Since they can legally pursue repayment, there wouldn't be any legal recourse for the employee to take against them even though they were negligent. This is because the employee has not suffered any damages. They just have to repay money that they wouldn't have legally received in the first place had the employer been more attentive to their accounting.
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It is unfair for the employee since they have had the rug jerked out from under them twice, but it would be legal for the employer to pursue the repayment.
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I am sorry that I don’t have better news for the employee, but please understand that I do have an ethical and professional obligation to provide customers with legally correct answers, even when an answer is not favorable to the customer.

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Thanks.

Barrister

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If you need further help, just reply to me via the “REPLY” button and I will be happy to continue.

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I cannot enter into an attorney client relationship, this is a public forum, and all posts are available for public viewing. There is no duty of confidentiality that attaches to any posts. The information provided is not a substitute for a local attorney’s legal advice.

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Customer: replied 1 year ago.


Can the employee at least be able to negotiate the terms?...employee is tied up for a number of years to repay via payroll deduction and a lump sum if employment is left for any reason. Being able to seek better opportunities of employment - repayment is not the key issue, it is the terms surrounding the repayment. Employee does not have the means to repay a lump sum and would like to seek better employment opportunities. payment with interest was one of the options initially offered by the payroll supervisor but the written agreement did not include any other option but a lump sum if employment is left for any reason. can the employee be terminated for not signing the only terms currently being offered?

Expert:  Barrister replied 1 year ago.
Can the employee at least be able to negotiate the terms?
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I would say yes, because the employee could always just threaten to quit and then the employer would have to get an attorney to sue them civilly for the return of any overpayment. This is expensive so it gives the employee some leverage in negotiating a reasonable repayment plan since this was completely a problem that has arisen through the employer's negligence.
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can the employee be terminated for not signing the only terms currently being offered?
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Technically yes, unless the employee is under a written employment contract for a specific term with the employer, they are considered "at will" and can be terminated for any or no reason at all.
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But if the employee didn't agree with the proposed terms, they could force the employer to fire them and then the employee would be eligible for unemployment benefits. The employer would then have to file a civil lawsuit at considerable expense to sue the former employee for the overpayment.
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Thanks
Barrister
Customer: replied 1 year ago.

the employer is "the city" and they have the lawyers to pursue a lawsuit. in the event the employee leaves employment for whatever reason (on their own or via termination by the employer), the city presents and, based on what you noted above, wins the civil lawsuit against the employee. the employee does not have the lump sum amount to pay back, what can happen to the employee? (a genuine concern, the employee like many others lives paycheck to paycheck) what options, if any, does the employee have in bringing resolution to the matter. employee has never been involved in legal matters. does the legal system offer options (jail time, payment plan, take away your few belongings)? May sound ridiculous but these are real concerns and the reason why legal counsel is being sought.

Expert:  Barrister replied 1 year ago.
what can happen to the employee?
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If the city gets a judgment, then they can ask for any wages the defendant earns to be garnished up to 25% to pay the judgment. They can also try to seize any bank accounts or other investments other than retirement accounts. But if the defendant doesn't have much in the way of assets, then the city may have a judgment that they can't collect on.
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If the employee was terminated, then unemployment benefits are exempt from creditors under federal law. So if the employee doesn't have a lot of assets and gets fired, then the city will likely be unable to collect. There is no longer "debtor's prison" so there is no possible threat of jailtime.
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But the employee could always file bankruptcy if the city got a judgment and it would wipe out the judgment along with any other debts the employee had.
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Thanks.

Barrister

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If you need further help, just reply to me via the “REPLY” button and I will be happy to continue.

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I cannot enter into an attorney client relationship, this is a public forum, and all posts are available for public viewing. There is no duty of confidentiality that attaches to any posts. The information provided is not a substitute for a local attorney’s legal advice.

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Customer: replied 1 year ago.

In regards XX XXXXXXXXX wages & retirement, could they garnish military retirement pay?

Expert:  Barrister replied 1 year ago.
No, any type of retirement pay or benefits, be it military, IRA, 401K, Social Security, pension, etc., if exempt under federal law.
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Thanks
Barrister
Customer: replied 1 year ago.

Can they garnish wages from the employee's spouse income (spouse is not employed by same employer)? Could this situation/outcome(whether court is involved or not) be reported to/reflected Credit Business Bureau (impacting the employee's credit scoring)? Could it be reported or noted somewhere where this may affect future employment? (areas now looked at by many employers prior to hiring.)

Expert:  Barrister replied 1 year ago.
Can they garnish wages from the employee's spouse income
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No, the spouse is not liable for the debt.
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Could this situation/outcome(whether court is involved or not) be reported to/reflected Credit Business Bureau (impacting the employee's credit scoring)?
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Only if they sued and got a judgment against you could they report it.
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Could it be reported or noted somewhere where this may affect future employment? (areas now looked at by many employers prior to hiring.)
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This I am not positive about, but since it is not the employee's error, I don't believe that any employer would report this since it makes the employer appear incompetent.
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Thanks
Barrister
Customer: replied 1 year ago.

previously noted: "no the spouse is not liable for the debt"; also previously noted: "They can also try to seize any bank accounts or other investments other than retirement accounts." If the employee's bank account is a "joint account" (with spouse) can they seize the account (thus seizing spouse's income)?


 


previously noted: "Only if they sued and got a judgment against you could they report it." (referring to reporting to credit bureau). how long would this information remain in the report? once total reimbursement takes place - would the information be required to be removed from the report?


 


 

Expert:  Barrister replied 1 year ago.
If the employee's bank account is a "joint account" (with spouse) can they seize the account (thus seizing spouse's income)?
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Yes, they can indirectly seize spouse's income. But they can't come after assets that are titled in spouse's name only. That is why the debtor spouse's name should be removed from jointly held assets to prevent this.
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how long would this information remain in the report?
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7 years.
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once total reimbursement takes place - would the information be required to be removed from the report?
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No, the credit report would be amended to reflect that the debt had been paid, but the entry itself would be there for 7 years.
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Thanks
Barrister

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