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  1. #1
    derek20la is offline Junior Member
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    Salary Overpayment Statute of Limitations

    Hello everyone. First off let me say that I live in Los Angeles, California.

    Last week, my employer sent me a notice that I owe them $5,895 due to an overpayment that occurred from July 2005 until December 2005. I was on illness leave during that time, and according to them I used up all my full-pay sick time, then reverted to the half-pay sick time but due to a miscalculation I continued to be paid at the full rate.

    However, in July 2005 my employer mostly unsuccessfully switched their payroll system to SAP- our illness and vacation balances were no longer being calculated correctly (or at all?) and in any case were no longer being noted on the paycheck stub. So I had no idea that I was now on only half time pay.

    Anyway, nothing happened during all of 2006, and now they are asking for it back. The document they mailed me asked to contact them regarding repayment options, but then on Thursday I got an email forwarded to me from someone at the district office informing me they unilaterally decided on the amount to deduct from all my future paychecks.

    What I would like to know is first, is there a statue of limitations for them to find out their payroll error? And secondly, is there a law that defines a maximum amount of money that they can take each month?

    I would really appreciate any information.
    Thanks,
    Derek
  2. #2
    cbg
    cbg is offline Senior Member
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    Off hand I don't know what the SOL might be, but I guarantee you it's longer than this.

    I'll let one of the payroll people answer the other part of the question.
  3. #3
    JETX is offline Senior Member
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    Quote Originally Posted by derek20la View Post
    is there a statue of limitations for them to find out their payroll error?
    No. Though there would normally be a statute of limitations on a claim, since you are still being paid, a good argument (and this is a legal argument) could be made that the SOL 'clock' doesn't start as your pay is a 'roll over'. You would then have to attempt to argue against that presentation. A court would have to determine which opinion prevails.

    HOWEVER, if there were a SOL on a case like this, it would likely be either 2 or 4 years, and either is clearly within the current timeframe.

    is there a law that defines a maximum amount of money that they can take each month?
    In my opinion, no. There are some that would claim that they can't reduce your pay below the minimum wage... but an equally strong argument could be made that the overpayment was in fact excess wage payments to offset the current wage obligations.

    One more thing to consider in all of this.... your job is clearly in jeopardy, contingent on your actions. Employment compensation is a two-way street.... and you have an obligation to confirm the wages you receive. If these roles were reversed and you found that they had underpaid you... you can bet you would be demanding immediate compensation. The employer is simply doing the same.

    Accept your responsibility in this and negotiate a repayment plan.
  4. #4
    derek20la is offline Junior Member
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    Thank you, I appreciate your help. Tomorrow I will call and try to work something out with them. I guess I'm lucky they're not asking for interest too hehe.
    Thanks again,
    Derek
  5. #5
    villain Guest

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    JETX is wrong. Your employer cannot just simply start deducting from your salary. Your employers must go through other avenues.

    I have a very very very hard time believing that there is no statute of limitations on wage overpayments. So can someone come after me for wages they said were overpaid 10 years ago? Statute on employee wage claims is 3 years even if you are still employed with said employer. Use common sense.
  6. #6
    eerelations is offline Senior Member
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    I too have a hard time believing that there isn't a statute of limitations on wage overpayment recovery, especially given the statute of limitations on wage claims. I would expect that if there IS such a statute, though, that it is at least three years, and this won't cover the OP's situation.

    To everyone who complains about employers trying to claw back wage overpayments: y'all are just lucky that you were never employed and overpaid by the large Canadian company (14,000 employees, large by Canadian standards) I worked for in the mid-90s. Whenever this company's payroll department made a mistake (and they made a lot of mistakes, they were the most disorganized bunch of payroll admins I've ever had the misfortune to work with) and overpaid someone, they immediately sent the error (along with the unfortunate employee's name, address, and home phone number) to an outside collections agency to rectify. They did this immediately upon discovering the mistake, often before the erroneous extra pay had appeared in the unfortunate employee's bank account! They also did it as soon as unfortunate-but-honest employees brought the mistake to their attention! This was part of their official procedures!
  7. #7
    Blue Meanie is offline Senior Member
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    Quote Originally Posted by villain View Post
    JETX is wrong. Your employer cannot just simply start deducting from your salary. Your employers must go through other avenues.

    I have a very very very hard time believing that there is no statute of limitations on wage overpayments. So can someone come after me for wages they said were overpaid 10 years ago? Statute on employee wage claims is 3 years even if you are still employed with said employer. Use common sense.

    Please site your source for this claim.
  8. #8
    JETX is offline Senior Member
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    Quote Originally Posted by villain View Post
    I have a very very very hard time believing that there is no statute of limitations on wage overpayments. So can someone come after me for wages they said were overpaid 10 years ago? Statute on employee wage claims is 3 years even if you are still employed with said employer. Use common sense.
    Learn to read.... since that is NOT what I said. Of course there is a SOL on a claim.... but there has to be something that 'starts the clock'. Like a breach, or a DOLA (Date of last activity), etc. Since the OP is still working there, an argument could be made that this was a 'rolling debt'... without any clock start. That is what I said... that you couldn't, or didn't, understand.
  9. #9
    ecmst12 is offline Senior Member
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    From what I have read here, in most states an employer can NOT simply deduct from your check to recover a wage overpayment without the employees express written consent. Not sure if that specifically applies to CA but I would expect it does since CA has very employee-centric legislation. However they can still employ a collection agency or file a lawsuit of the employee refuses to cooperate with the repayment. So (especially if OP wants to keep his job) it would definitely be in his best interest to cooperate and work out a reasonable schedule for repayment.
  10. #10
    JETX is offline Senior Member
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    Quote Originally Posted by ecmst12 View Post
    From what I have read here, in most states an employer can NOT simply deduct from your check to recover a wage overpayment without the employees express written consent.
    I agree with you 110%.... HOWEVER, I believe a strong argument could be made by the employer that the employee has simply already been paid. Very similar to someone getting an advance on their pay... and then repaying it back with labor.
  11. #11
    mlane58 is offline Senior Member
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    Under California Labor code: An employer can lawfully withhold amounts from an employee’s wages only: (1) when required or empowered to do so by state or federal law, or (2) when a deduction is expressly authorized in writing by the employee to cover insurance premiums, benefit plan contributions or other deductions not amounting to a rebate on the employee’s wages, or (3) when a deduction to cover health, welfare, or pension contributions is expressly authorized by a wage or collective bargaining agreement.
  12. #12
    tranquility is offline Senior Member
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    I don't know labor law too well, but I believe there are probably some statutory protections that would cover this situation. Even if not, I would argue latches for at least some of the money if the SOL did not run.

    The OP paid taxes on that money. If the business wanted it back, they would have to amend all payroll records for those years as the W-2s would be wrong. The business seems like it would be responsible for the excess tax paid by the OP for both federal and state and for the deductions taken from the salary (FICA, Medicare, SDI). It seems like, while the business would like to think the amount owed is liquidated, it really is not that well defined and would require a court to determine the amount the OP owed (if any) before any collection activity were to take place.
  13. #13
    melaquias is offline Junior Member
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    Unhappy Salary Overpayment issues

    I have a slightly different case.

    I left my previous employer (on very good terms) a few months back. I recieved a couple of paychecks (direct deposit) from them that I expected, and then a couple more that I didn't. The last one, they reversed the electronic funds transfer later that same day. I have to admit that I really didn't pay any attention to all this until the last event because I was notified of the reversal. At the time, it simply looked like they realized I was not due the last payment and so they reversed it. I thought that was strange that they could even do such a thing without my permission, but shrugged and forgot about it.

    Well, some time goes by, we are now in 2007 and I get a letter from their overpayments dept. It lists a bunch of claimed overpayments - starting with pay I KNOW i was owed from my last payperiod there and ending with the last payment that I know was reversed. It also lists a bunch of recoveries (from reversed tax withholding, benefits, etc.). It does not list the reversal that my bank statements show. Finally it notes a net due payment they want back from me. The net due is strangly slightly lower than the net of the listed overpayment minus the listed recoveries - so I don't know what the exact math was used to arrive at the number (which is many thousands of dollars to give you an idea).

    My issues are
    a) I know for a fact that some of the claimed overpayment was reversed at my bank - it is not in my accounts.
    b) at least part of the claimed overpayment spans payperiod for which I was owed money. I am less certain about the other periods. I believe I probably was overpaid - but by a significantly less amount than the letter claims.
    c) why on earth wouldn't they send such a large bill with an actuall itemized statement showing the math used to arrive at the # instead of this note with 'magic math' on it?
    d) my W2 forms are now in limbo pending resolution of this so my income tax filing is going to be delayed.

    Basically, they made all the mistakes here so far - they obviously screwed up recording my resignation date. They have incorrect math on the letter. They do not have a record of the funds reversal that my bank shows. And yet this is going to turn into a huge pain in the ass for me.

    I am in Mass. The company is a very large F500 firm with a zillion employees.

    Advice?
  14. #14
    pattytx is offline Senior Member
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    Melaquias, why didn't you start your own thread? Having said that though, fine, here we go.

    they reversed the electronic funds transfer later that same day. I was notified of the reversal. I thought that was strange that they could even do such a thing without my permission,
    They are required to notify you and they did. I'll bet the direct deposit authorization you signed when you enrolled included a statement regarding reversals of incorrect amounts; any half-way decent authorization agreement does.

    a) I know for a fact that some of the claimed overpayment was reversed at my bank - it is not in my accounts.
    Then get a copy of your bank statements showing the reversals.

    b) at least part of the claimed overpayment spans payperiod for which I was owed money. I am less certain about the other periods. I believe I probably was overpaid - but by a significantly less amount than the letter claims.
    So, calculate the amount that YOU think you were overpaid and go back to them. BTW, if you thought you were overpaid in the past, why didn't you question it then?

    c) why on earth wouldn't they send such a large bill with an actuall itemized statement showing the math used to arrive at the # instead of this note with 'magic math' on it?
    No idea, we're not inside their heads. I would have, as a payroll manager, but that's just me.

    d) my W2 forms are now in limbo pending resolution of this so my income tax filing is going to be delayed.
    What do you mean, your W2 forms are in "limbo"? They should be issuing your W-2 as the situation stood on December 31. Nothing can change until you repay something.

    This may be a PITA, but you're going to have to deal with it. Or, you can ignore it and see if you get sued. Then, you'll have to deal with it then.
    ---------------------------------------------------------------------------------------------------------------------------------------------------------
    You have not won the law suit lottery; in fact, you haven't even won the law suit scratch-off.
  15. #15
    melaquias is offline Junior Member
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    I apologize for the hijack. No offense or interrupt was intended.

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