If an employer overpays an employee for over two years, does the employee owe the company the...?

State laws differ, so even if you are in the U.S., this has only a chance of being totally accurate, but in Oregon, the employee is required to pay back the overpayment, though the employer is limited in the methods available to legally recover.

State of Oregon FAQ: Overpayment Of Employee Wages

Q. Due to an error by our payroll administrator, we inadvertently overpaid an employee for five pay periods, by a total of over $2,000. We believe the employee realized our mistake but decided to cash her checks anyway, without saying anything to us. Are we legally allowed to recoup the entire amount from the employee, even though it took us several months to discover the overpayment?

A. You are entitled to recoup all overpayments of wages, as long as you can clearly show that your employee received more than she was due under your wage agreement. However, to avoid running afoul of wage laws, be careful about how you get the money back.

Your safest bet is not to deduct money from the employee´s future paychecks, but instead to notify her of the overpayment and work out a mutually agreeable repayment plan under which she makes direct payments to your company.

The Oregon statute that allows certain lawful deductions from wages, ORS 652.610, does not specifically address the issue of wage overpayments. In the past, the Bureau of Labor and Industries viewed overpayments as a form of payment in advance and didn´t consider adjustments on future paychecks to be "deductions" that would violate this law.

However, in 1997, a federal court decided in the case of Duncan v. Office Depot that withholding money from an employee´s check to recoup an overpayment was an illegal deduction under the Oregon statute.

In that case, the employer overpaid the employee, Kevin Duncan, by nearly $5,000 over a period of months. After discovering the mistake, the employer wrote a letter advising Duncan of its intention to recoup the money through weekly payroll deductions and asked him to sign the letter. Duncan did sign the letter, but indicated that it was "under protest." After one deduction was made, Duncan resigned.

The federal court determined that the employer was entitled to return of the overpayment, but that its method of recouping the money constituted an illegal deduction.

Even though the court ruled such deductions are illegal, the policy of the Bureau´s Wage and Hour Division is not to pursue employee wage claims when an employer has a valid counterclaim against the employee. So assuming that there is no dispute that your employee was overpaid, the Bureau would not investigate the employee´s claim.

Of course, this wouldn´t prevent her from taking private action and seeking penalties in a lawsuit in court. That´s why a payment plan that doesn´t involve the paycheck is your wisest option.

And what if the employee won´t agree to the repay the money? Hopefully, it won´t come to that, but your company can take disciplinary measures when it´s clear the employee isn´t entitled to the extra wages. You can also sue the employee in small claims court and obtain a judgment against her. And even if she goes to work for another company, you can enforce the judgment by garnishing her wages.

For example if the employee had received a $50/wk raise and a clerical error caused it to go through as $80/wk, over 2 years that would be over $3000. The company should not demand the money back for their mistake.

However if it went through as something more like $500/wk the employee should have seen the mistake and reported it. It is like getting too much change from a cashier, maybe $100 bill instead of a $10. It is a matter of honesty.

On the other hand if an employee was filling out timecards for 40 hours when she worked 37.5 because she stayed at her desk during lunch, that would be dishonest.

In the first instance, the employee should not be expected to pay it back but shouldn’t expect another raise for quite a while. If the employee is fired in this case, the employer is not the kind of person you want to work for.

If the employee should have known about the error or it was the employee’s fault, I would say fire her. As far as getting the money back it might be more trouble than it’s worth. If it was something like putting in more hours than worked it could be a criminal offense.

The tax issue can be taken care of by returning the money and everybody files amended returns for those years. That may be a reason for the employer to just let a smaller amount go. The best thing to do if the employer wants the money back is to go to the state labor commission.

Most states have ’at will’ employment unless you are under contract. That means they can fire an employee at any time for any or no reason.

Yes, of course, the company can demand the money back if they overpaid. If someone were underpaid for three years, they would expect the company to cough up the money, and they would be obligated to do so.

As to employment, they can't 'force' an employee to leave. They can fire or terminate the person, or that person can quit on his or her own, but they can't force the employee to leave without official termination or firing procedures.

As it was the company's fault, they should be more lenient in the payback time, and allow the individual to pay back the overpayment over time out of regular checks. Perhaps you should have a conversation with the boss and see what can be salvaged from this situation at this point.

An employer can decrease a pay rate at whim with no notice to the employee required. Same can be said for an increase. After two years it would be fair to say the the employee may assume that such an increase was in fact a pay increase.

Forcing a payback or quit should be considered wrongful termination.

Find yourself a labor lawyer for answers.

Can they fire you? It depends. Unless there are some legal protections to your job or you are under contract, Probably. You are more than likely an "at-will employee".

Do you wish to continue there, see paragraph above.

Another alternative, maybe you could negotiate a satisfactory arrangement; it that could be possible. Is it safe to assume that the employer wants it all back?

I wish you luck.

Well I know working for the Government if they overpay you, they will get all of their money back somehow. Usually they just take a small amount out of your pay check every month.

This very thing happened to my sister....she had to pay it back but they made it easy by letting her make monthly payments. The company should get rid of whoever made such a mistake for so long.

you only have to pay it back if you signed something saying that you are reliable for it, they recently just passed that a long here at CVS/Caremark. If you did not sign anything for that matter, you should not be responsible

get a lawyer

yes you are liable for that