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I'm not totally sure I understand the situation. Is your employer accusing you of timecard fraud? Also, when you say that "all the funds from that period were deducted" what do you mean exactly? Are you saying that they essentially didn't pay you for the hours you submitted because they claim the hours were not worked? And lastly, when you say that this resulted in overdraft protection, by that do you mean you paid bills anticipating that your paycheck would be deposited and since it wasn't the bills you paid resulted in an overdraft?
If you could clarify these points for me I would really appreciate it.
It is impossible for an employer to actually withdraw money from your account. What they did was cancel the transfer before it was finalized. The funds may have even showed as pending on your account and been reflected on your account balance, but the money was not yet actually there, again, since an employer has no way to withdraw money from your account. It is not illegal for them to cancel the transfer in order to send a new transfer in the correct amount. It's very unlikely you'd be able to go after your employer in court for any damages you suffered as a result of the cancelled transfer for a variety of reasons. Liabiliy would be very hard to establish since the initial reason for the overpayment was your error. The damages would also likely be deemed unforeseeable. Finally, it would simply cost more to file suit than any damages you would stand to recover.
You can certainly ask your employer about compensating you for the overdraft. But I would couch this as a request and not a demand, as you are probably not in a position of legal leverage and so it may be best not to ruffle feathers over this. That's just my honest opinion.
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