How to Deal With an Accidental Extra Paycheck After Quitting

How to Deal With an Accidental Extra Paycheck After Quitting

Reviewed by: .

Payroll errors can happen for any number of reasons and are actually quite common. Sometimes keystroke mistakes can dramatically change the amount deposited into your account. In some instances, the hours of another employee receiving a higher wage get credited to your account instead. 

Here’s how to deal with an accidental extra paycheck after quitting:

  1. Make your former employer aware of their error. 
  2. If the amount is intact, pay it promptly. 
  3. Let them know if you’ve already spent the money. 
  4. Inquire about what you can do to make the correction.
  5. Cooperate in the recovery of the overpaid wages.
  6. Avoid disputes that could lead to legal action. 

Honesty is the best policy. While the temptation to get away with the overpaid wages may arise, the extra paycheck is not worth tarnishing a good name. This article aims to help you navigate the nuances and legalities of receiving an extra paycheck after quitting. 

Tired of Your Current Job?

Search through 123,702 job opportunities available in the United States.

Search
Generic filters

1. Make Your Former Employer Aware of Their Error

If you become aware of the error before your former employer does, the decent thing to do would be to contact your former employer to let them know. Your ex-bosses will appreciate your integrity and may give you glowing recommendations for your next job. 

Some people have impressed their ex-boss with their honesty and they were rewarded by being allowed to keep the overpaid wages. 

If you have no such luck, a clean conscience and a good service record are reward enough. 

2. If the Amount Is Intact, Pay It Promptly

If the money is still in your account by the time you became aware of the company’s error, simply give it back. This is the fastest and the least stressful way to conclude the matter so you can get on with your other career endeavors. 

When some people realize they’ve received an extra paycheck in error, they rationalize keeping the paycheck by convincing themselves that the amount is probably inconsequential to the company. 

It is never acceptable under any circumstances.

3. Let Them Know If You’ve Already Spent the Money

Some people make the honest mistake of assuming the extra paycheck was not given in error and proceed to cash it in and spend the money. Only later does it occur to them that the paycheck was issued by mistake and would need to be returned. 

If the wages have been spent, you will need to come clean to your former employers. 

Full disclosure might keep them from demanding the immediate full payment of the overpaid wages. If the company doesn’t have a clear policy on how to proceed in these matters, it may need to assess the situation and come up with a solution. 

4. Inquire About What You Can Do To Make the Correction

So you’ve let your ex-bosses know they overpaid you. The logical next step is to find out how they want to go about recovering the overpaid wages. Since you’ve left the company, they can’t take it out of your next paycheck. 

At this point, it might be ideal to ask if you can make the payment in installments to mitigate the impact on your finances.

5. Cooperate In the Recovery Of Overpaid Wages

Your former employers will appreciate your willingness to cooperate with them, which increases the chances that they will offer you considerate repayment options such as extended deadlines for full payment, and small payment installments. 

They may even let you pay only a certain percentage of the total amount. 

6. Avoid Disputes That Will Lead to Legal Action

In some states, your written consent is required to authorize your ex-employer to make a direct deposit reversal. 

If your consent is requested, give it to make the transaction as amiable as possible. 

Refusal to cooperate will lead to your former employer obtaining a court order to retrieve the wages. You can kiss good recommendations goodbye after that. Keep in mind that losing a lawsuit goes into your public record, which is never a good look.

Should I Tell My Employer They Overpaid Me?

You should tell your employer they overpaid you. Telling your ex-employer that they overpaid you is a mature and decent thing to do. Not only is it ethical, but it is also in your best interest to do so to avoid the legal implications of holding on to the money.

Trying to get away with the overpaid wages could negatively impact your employment record. It could also lead to stressful legal action that could cost you more than the extra paycheck you received. 

Can An Employer Claim Back Overpaid Wages?

An employer can claim back overpaid wages. Overpaid wages legally belong to your former employer, and they are within their rights to recover them. For example, if you have not yet cashed in the paycheck, they can place a stop order on the check.

If you were paid by direct deposit, they could request a deposit reversal to your bank. They are only allowed to deduct the overpaid wages. 

Are There Legal Implications if I Do Not Return Overpaid Wages?

There are a few legal implications if overpaid wages are not returned. A court claim of civil debt might be filed against you in which your former employer is allowed to take your property or have money taken out of your bank account if your account is garnished.

The legal implications of refusing overpaid wages would be enough to discourage the wise from trying to withhold the money. State law is clear that employees have a right to recover overpaid wages. 

Here are some of the legal implications of refusing to return overpaid wages.

Court Claim of Civil Debt

If you refuse to return overpaid wages, the company may file a court claim of civil debt against you in which you will receive a court summons to appear before a judge. Inability to pay in the instance when you have already spent the money does not mean your former employer cannot win the lawsuit.

The lawsuit is not based on whether you can pay back the overpaid ages or not, but rather, it’s about whether you owe the company. 

A win for your former employer means the court has decided that you owe money to the company. In some debt cases, an “execution” may be requested from the judge. If granted, it is legal for your ex-employer to take your property, which might sometimes be a car. 

However, in many cases, the matter is not taken to court because it would cost the company more legal fees than what you probably owe them. But if the matter is pursued in court and you lose the lawsuit, you will be asked by the judge if you are willing to enter a repayment plan. 

If you agree to enter into a repayment plan, this is considered an “agreement of judgment,” which is legally binding. Failure to make payment is a violation of this court order. 

Bank Garnishment

Bank garnishment is another course of action the company may decide to take. 

Instead of taking property, they can take money out of your bank account if they win a lawsuit against you. Depending on state law, some funds, such as federal benefits, veterans, social security, and railroad retirement benefits, may be protected from garnishment. 

What You Should Do if Legal Action Is Taken Against You

In a worst-case scenario, the company may decide to pursue legal action. Sometimes, it is not so much about the money as it is about making sure a precedent is not set in which future employees can refuse to pay overpaid wages without consequences. 

If this happens to you, here are some things you can do to deal with a lawsuit.

Always Show Up for Your Court Date

It’s always a bad idea not to show up for a court date. Whether or not you have the means to pay what the company is collecting, be there for your appointment. Refusing to go will only make things worse. 

In court, you can make it clear that you do not have the money to pay the debt.

If You Lose the Lawsuit, Consider Entering a Repayment Plan

Losing the lawsuit means you are legally found in debt to the plaintiff, which is your ex-employer. Instead of having them take your property or having your bank account garnished, you can enter a repayment plan. 

A repayment plan means you have agreed to pay back a set amount every month until the debt is settled. 

Conclusion

Receiving overpaid wages may feel like a win when you receive an extra paycheck. While the logical next step is to ask the company if the paycheck was given in error, some people have landed themselves into the pitfalls of listening to the little devil on their shoulder telling them the company won’t miss the extra paycheck or that it would be inconsequential. 

To avoid the stress and embarrassment of legal proceedings, return overpaid wages. 

References