If my former employer made a mistake and overpaid my holiday pay, do they still have a right to demand I repay them?

UPDATED: Jun 27, 2015

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If my former employer made a mistake and overpaid my holiday pay, do they still have a right to demand I repay them?

About 4 months ago, I left my position for a new job out of state. My former employer paid me for my holidays that I did not take when I left. Now I have received a phone call and a letter saying they overpaid me by 1 holiday and are demanding that I pay the money back in about 3 weeks or they will take legal action. The person in charge of using my holidays and organizing them was the one who called me and said she made a mistake and overpaid me.

Asked on June 27, 2015 under Employment Labor Law, Tennessee


M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

Whatever the reason for an overpayment, an employee is responsible for repaying an employer (or former employer) once it is demanded. The fact is that an error does not entitle a worker to keep money that they didn't earn. That would amount to something known as "unjust enrichment" and a court would not tolerate that.

That having been said, an employer may not unilaterally take money out of an employee’s paycheck, even it is their final paycheck. If the employee in question will not voluntarily allow their employer (or ex-employer) to deduct the money from their paycheck or work out a repayment arrangement, then the employer may be forced to sue them to retreive the their money.



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