I resigned from a previous job (in CA) a few months ago. Unfortunately, I have still been receiving pay via direct deposit, despite the fact that I haven't filled out a timesheet in months. Additionally, no one in HR is answering the phone(!)

I've already decided to contact my bank and try to disable the direct deposit. But am I obligated to inform my employer of their mistake, especially if I'm going to have to go out of my way to do it? If they ever figure out what's going on, can my employer demand that the entire amount they've overpaid be returned all at once, or can it be repaid over a period of time? Can they deduct it from my checking account?

Thanks so much ...

Most times when you sign up for direct deposit, you sign a form stating that they have the right to remove from your account any overages you were paid.

Yes, hauloi, but ACH reversals may only be made within 5 days from the original settlement date and only for the original amount deposited (not a lump sum).

Have you sent a certified letter to the employer, return receipt requested, so you can prove it was delivered and who signed for it?

In any case, you say you have been overpaid for months, but you cannot repay it in a lump sum? That is, if I may say so, foolish. You know you were overpaid, you have to know they are going to catch it eventually, so you should NOT be spending that money, because they ARE going to want it back. As a matter of fact, you could even put it in an interest-bearing account and make a few pennies.

Just do the right thing here... If you can't contact the employer, leave the money alone! Open another account, and use that new account so you dont get confused.

I had this occur to me once, I noticed after about 2 payperiods that I had alot more money in that account than expected... When I looked at the statement, I noticed what happened. I wrote a check for the deposited amount, along with a copy of the bank statement (with everything else blacked out) and mailed back to the Manager certified mail.

I got a call and a job offer a few days later! Try to do the right thing here and it might work out better than expected!!!

It seems that this mistake is made by companies more frequently that one would think. The problem is that it places a large burden on the employee to segment the funds and keep track of what is owed.

The problem is that when a person makes a mistake, the law does not allow another person to simply scoop up unearned money. However, the law only goes so far to protect people from their mistakes.

The best way to fix any type of overpayment problem is make it clear to the employer that you are accepting the money as wages. For instance, you could write a letter to the company saying something like: "You are still depositing money into my bank account. It may be that you are making a mistake by doing this. If so, it is causing me great inconvenience. However, if you wish to pay me the money as wages to work on an 'on-call' basis to answer various questions you may have over the telephone, please continue to deposit the full amount into the same bank account. I appreciate the high value that you place on my continued services and hope you continue with this arrangement. Any additional payment by you will be taken to ratify this agreement back to the time of my termination of full time employment and vest all such funds already paid fully in me."

It is not your job to run the employers business for them. If it is indeed a mistake, send such a letter by certified mail and I am sure it will be cleared up immediately. If not, periodically send them thank you letters.

If not, periodically send them thank you letters.
too funny :D

Although I left my former employer July 31, 2005, I received paychecks via direct deposit into my checking account until Jan. 31, 2006. I informed my former employer about the error several times by e-mail and phone last summer and fall. A director of the department I worked in told me that HR was looking into the matter and someone would contact me. No one did, until last week when I received a letter requesting payment of the overpayment of gross wages in the amount of $29K.

I phoned the payroll department and faxed copies of the email correspondence I had sent regarding the company's error. The payroll department then told me that I needed to repay the net wages that were deposited into my account, to the tune of $17K.

I live in Arizona now and I'm not familiar with California laws. Do I have to repay the $17K in net wages that were deposited into my checking account because of my former employer's error? By the way, I also never received any paperwork regarding COBRA, my 401(k), etc.

Yes, you are required to repay the money you received and which you did not earn. The fact that it was the company's error does not mean they are prohibited from correcting the error. This would be true no matter what state you live in.

The COBRA etc. is a completely separate issue. If you did not receive COBRA notification you can file a complaint with the US DOL. What, if any, recourse you have about the 401k plan depends on what the plan document says. Some plans do not distribute more than twice, or even once, a year. But if I would you I would start by calling and ASKING them to send it to you.

BEP, it's a good idea to start your own thread rather than piggyback on an old one. Yes, you do have to repay them. They can take legal action against you if you don't. Hopefully, you haven't spent any of these funds.

Thanks for your speedy responses, CBG and Marketeer. I assumed that I would have to repay the net amount, but when I came across this site today and read some of the other threads, I thought I'd ask for input on my own situation. (I couldn't figure out how to start a new thread! Duh.)

The payroll department said I'd be entitled to whatever I (and the company) contributed to my 401K until my departure date. Then, they'd figure out the gain, excluding the erroneous contributions and company matches, since August 1, 2005.

I still think it's ridiculous that a Fortune 200 company didn't rectify this situation when I alerted them to the problem last August. Perhaps some heads will roll!

You can't post your own thread from INSIDE an exisiting thread. You have to exit the thread you are reading. Then, all you have to do is click on "Post New Thread".

Let us know if we can be of any further help.

In general terms, you are required to pay back overpayments due to mistake. The problem I am having with this case is that the overpayments went on for 6 months, and the employer was notified of them. The law does not allow you to snatch up money because of the mistake of the other. However, that is not the case here. Provided the company was clearly notified of the mistake, it could be that they would be barred from now asserting a claim. This is based on the doctrine of estoppel. I can not give a complete analysis here because I don't have all the facts, but you might have a good case to keep the money -- at least that which was paid after you notified the company.

Thank you for your reply, Michael. Before I mail a hefty check to my former employer, I hope you can provide me with more legal advice. I kept email records of my correspondence with my former manager, a director at a Fortune 200 company. She was the only person I notified regarding the erroneous paycheck deposits.

Email #1 (August): I wrote that I didn't think payroll or HR were aware of my departure from the organization because I noticed deposits in my checking account. I asked her to look into the matter.
Email #2 (mid-Sept.): A follow up to email #1.
Email #3 (late Sept.), I wrote that not only were checks still being deposited, but I still hadn't received any information regarding insurances and my 401K. I asked how we could resolve the situation.
Phone call (late Sept.): I followed up this email with a phone call, in which the director responded that HR was looking into the matter.

I sent copies of all emails to the payroll department. Staff members are apologizing profusely to me, interviewing staff members who were supposed to handle the situation, and pointing fingers at each other.

Actually, no one on this site can provide you with specific legal advice, only general explanations of the law. For specific advice, you will have to consult with a local attorney.

CBG, I realize this is an open forum for exchanging thoughts and opinions. It's nice to read differing opinions on how I should handle my situation. I will, indeed, meet with a attorney because it seems I'm in a gray area.