If an employee is overpaid must they pay it back?

UPDATED: Jun 19, 2011

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If an employee is overpaid must they pay it back?

My 19 year-old son was fired from his job at a large bank last month and this month he received a letter that he was overpaid during the time he was there.We can’t really tell from the letter but we think they want back money for vacation time he took. They said he did not earn it since he is not working there anymore. I’m not exactly sure why they are saying he was overpaid. Either way can they legally do this? Does he have to pay it back?

Asked on June 19, 2011 under Employment Labor Law, New York


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Two different issues here:

1) Legally, if an employee is overpaid, he must repay it. Someone does not have a right to money because it was given to him by mistake, and without a right to it, it must be returned. Consider: if he was underpaid by mistake, he'd be entitld to get the money--the company could not keep it due to the error. Or if he overpaid a contractor or repair person by mistake, he be entitled to the money back. The same principal applies.

2) Factually, the company must be able to prove the overpayment; that is, your son can certainly dispute that he was overpaid in the first instance. If the company can prove it by a preponderance of the evidence ( basically, more likely than not that your son was overpaid), they'd be entitled to the money.

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