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Can employer Deduct wages due to their error in California? California

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  • Can employer Deduct wages due to their error in California? California

    I closed my checking account on 7/18/2012 I was to be paid on 7/20/12, the cancellation of Direct Deposit did not make it to my employer on time so they went ahead and sent My wages to the bank, which my bank refused and on 7/23/12 my employer cut me a hard check. A week later I got a message stating that they will be deducting the wages from my next check because my bank debited my employer for the funds. (this is false my bank states that there is no way they could have done this) My employer now emailed me saying that they will consider the over payment an "advance" and will deduct the funds from my next check. Essentially I will not receive my next paycheck. Can they do this?

  • #2
    Ask your employer what they will accept from the bank as evidence that your account was closed and you never received the money. They legally must pay you but the simplest solution is to work with your employer directly.
    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.


    • #3
      There is also another possible issue.That your bank still has the funds. When a direct deposit occurs, there is basically a bank number and an account # transmitted as electronic information. Basically your employer sends all information to the Automated Clearing House and they package all transactions for your bank for that day into a single package and forward to your bank. I am familar enough with the mechanics of ACH transactions to think that it is very likely that your bank originally got the money. The same would be true if an entirely bogus account number was used. As long as the bank number (aka ABA #) is valid, the funds will transfer. The account # is meaningless outside of your bank. The payer can verify the ABA # but not the account # electronically.

      Then after that point the payer (employer in this case) sends something called a "recall". This is legally a request, not a demand. It is another ACH transaction. The other bank is not legally required under ACH rules to return the funds. And having done a lot of ACH over the years, sometimes they do not. So just because you did not get the funds, does not with certainty mean that the employer got the funds back. Worse, someone in payroll has to generally go over to the people at your employer who look at cash receipts, give them the amount of trhe expected return and someone has to manual look at all ACH receipts. Your name will not be on receipt. I have worked for companies where small unknonw ACH receipts were something that the cash management people would basically wait until month end to research. I have been on the payroll side of things, and it has often taken me weeks to sort these things. I have sat in on conderence calls between my bank and the other bank where it turned out the other bank offset the "refund" against some other funds that they felt our bank owed them. If your bank has really sent the funds bank there is an internal reference (a really long ACH number) which they should be able to give you (and your employer). And the employer could use the tracking number to see if they really got the funds. And since that is a completely random number issued by ACH it will be non-obvious (not your account # or SSN for example).

      Direct deposit is very nice when it works, but when it messes up it is often mechancially harder to sort out then checks would have been.
      Last edited by DAW; 09-02-2012, 12:08 PM.
      "Reality is that which, when you stop believing in it, doesn't go away".
      Philip K. **** (1928-1982)


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