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Employer seeks overpayment from 1099 employee - claims paid in advance

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  • Employer seeks overpayment from 1099 employee - claims paid in advance

    I worked for an organization on a salary basis monthly as a private contractor. There was no contract, and we had never talked about pro-rating salary.

    I asked for payment in first week of September for work done in August, though it was a short month. The employer meanwhile was under the understanding that he was 'advancing' payment to me. This issue came up months later when I left the organization on the 1st of the month, and took the check issued on the 1st of that month thinking it was for the previous month's work. The bookkeeper claimed she didn't know I was leaving and made a mistake in paying me. The truth is, she didn't know the employer was paying me in 'advance' and had no reason to think they would do business that way. Additionally, they had paid me properly the year before - based on work done, not in 'advance'. I had no reason to anticipate anything else.

    A year later they are still trying to collect that month's payment from me. They admit that it wasn't the smartest business practice, but it was a misunderstanding, and we should settle it amicably before they are forced to take further action.

    Without a contract, without any offer to pro-rate the work I did do in August to settle upon a reasonable overpayment return - where do I stand?

    Thank you for your help.

  • #2
    You owe the money. Period. I strongly suggest paying it back before they take legal action.
    I post with the full knowledge and support of my employer, though the opinions rendered are my own and not necessarily representative of their position. In other words, I'm a free agent.

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    • #3
      Originally posted by ElleMD View Post
      You owe the money. Period. I strongly suggest paying it back before they take legal action.
      Can you explain more?

      I don't see how I owe them anything, when according to their logic in trying to re-claim this payment, I just didn't work for them at all in that month. Which is far from the truth. They actually dictated the work schedule for August and I have record of correspondence and meetings that took place since early July toward that. Pro Bono work was never part of our agreement. How can they just say that it was a mistake?

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      • #4
        First of all, there is no such thing as "1099 employee". All workers are either "employees" or "independent contractors".
        http://www.dol.gov/whd/regs/compliance/whdfs13.pdf

        Past that:
        - The customer (independent contractors do not have "employers") is claiming an overpayment. You are claiming no overpayment. This is called a dispute.
        - One of the methods of settling disputes is going to court. If your customer chooses to take you to court, both parties get to tell their version of the "facts" to the judge. The parties will not agree on what the facts are. At the end of the day, the judge gets to make a decision. At least one party will be unhappy about the decision.
        - And to be clear, the customer can indeed choose to take you to court. Similarly you can choose to take them to court. If you go to court, you will want to be able to support your version of the "facts". Have you formally documented your time worked to the customer?
        - If you go to court, you might win, but you might lose. If you lose, in addition to actual damages you can also be held liable for court costs and the other guy's attorneys fees.
        "Reality is that which, when you stop believing in it, doesn't go away".
        Philip K. **** (1928-1982)

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        • #5
          Thank you for the clarification.

          Yes, I am an independent contractor.

          My salary was based on 20 days of work per month. I can document 8 of those days being physically at work as they requested for the month in question.

          Other facts that pertain that both sides would be able to document -
          Client had me working since early July through August in seeking out and interviewing other contractors for our organization (on top of the 8 days). Can document through our written correspondence.

          Neither of us ever discussed payment for that partial month or the term 'advance payment' for any subsequent month. I simply asked for my check (which was par for the course for me and other contractors to have to remind them to pay us, constantly.) Documented through email and text reminders we sent.

          This dispute did not arise until six months later when they claimed they switched pay periods from that previous year, and for me only, but not the other contractors. That is in writing, but after the fact, after I had left the organization.

          Records show I got paid on the first of each month (or a few days later when they remembered to cut a check) just as I had the previous year.

          DAW - is this worth the fight? I have no idea what a civil claims court battle entails for an amount under $1k.
          I don't think it's right that my client is seeking re-payment because they run a loose ship, can't figure out their budget, and expect something for nothing. It's about the principle of the thing for me.
          What would you do?

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          • #6
            I have no way of knowing what is the correct action for you to take. And if the customer wants to take you to court, you WILL end up in court.

            My suggestion for whatever it is worth is to take a honest look at just what work you actually did. If you are suggesting that you did 8/20s of a normal months work, then that would seem to be your counter offer. Document what you have said, and return the balance. IF you end up in court, having clean hands would help with the judge.

            I have no way of knowing whether or not your customer will take you to court, but based on your own argument, you cannot support keeping 100% of the August payments.
            "Reality is that which, when you stop believing in it, doesn't go away".
            Philip K. **** (1928-1982)

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