Payroll Deduction Error Results In Employee Overdraft

Q: A friend told me that her employer mistakenly overpaid her in 2010, so they set up a payroll deduction for her to repay the money. Accounting mistakenly keyed in $500 instead of the $50-putting her in a financial hole, as her rent check then bounced. Now she is facing penalties/fees from her landlord. Does she have any recourse?

A: She should have recourse. Her company should correct the mistake and should make her whole. Her employer has an obligation to make sure that payments made to her are made correctly. If they made a mistake, they should not only correct that mistake but should offer to cover any fees she incurred as a result of the bounced checks.

While practically speaking that’s what her employer should do, I would suggest that you tell her friend to approach her boss and describe the situation her employer put her in and indicate the fees that she incurred as a result of the company’s error. You’d hope that her boss would offer to pay for the costs of the bounced checks and any penalties and late fees she incurred.

If the employer fails to pay the fees, she might then have to consult with an employment lawyer about her options. But the cost of the lawyer may exceed the fees she incurred. You can only hope the employer is ethical enough to make her whole.

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3 Responses to Payroll Deduction Error Results In Employee Overdraft

  1. brian pratt says:

    if the woman was overpaid, she would have been aware of it…she cashed the check, then tries to blame her employer for a bounced rent check…and you, mrs. real estate advisor, financial advisor, tell her the company should make her WHOLE?…try getting WHOLE YOURSELF !..i wouldnt want you to handle any business of mine for one simple reason…you are dis-honest….period…

    how can you advise that??

    didnt you read the simple words “SHE WAS —OVERPAID” ????

    what dont you understand about that….and the woman set up the re-payment terms also, dearie..

    luckily, she wasnt fired or worse for cashing a check that WAS NOT HERS ! FROM THE COMPANY SHE WORKS FOR ! ! 1


    • Samuel J. Tamkin says:

      Thanks. The issue is not whether she owes the money, she does. The issue is that the employer make a mistake in the amount of the withdrawal. She should repay the money, but if the employer made a mistake in handling the deduction from her paycheck or failed to tell her that they were going to make the withdrawal, that would have been wrong.

    • Stacey L. Spencer says:

      Brian, first, calm down. Second, you did miss something. The employee was overpaid $50 (fifty). But $500 (five hundred) was deducted from her account.

      Perhaps her employer could write a letter to landlord explaining that the overdraft was a result of their error and ask that the late fees be waived.

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