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My old employer's payroll department made a mistake and overpaid me.

I did not notice this payment in my bank account until I was notified 4 weeks after the payment was deposited into my account. When they contacted me, they said it was sent by check and I cashed the check, which is a lie. I have proof of the direct deposit.

I told them I could make small payments of $100 each week until paid off. They basically said no and that I need to pay in full in 3 weeks. It’s over $5k and I do not have the money at this time.

Do I legally have to pay them back?

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    how did it happen that you don't have these $5000 anymore? if you had to spend it on an emergency, you should bring it up – aaaaaa Dec 6 '18 at 3:02
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    It was never your money. If you receive an overpayment, you NEVER spend it because they WILL want it back. – Jane S Dec 6 '18 at 3:02
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    I'd suggest asking this on law.SE if your major concern is legality. – mandy Dec 6 '18 at 7:18
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    some places call direct deposits checks. Normally because people still call them "pay checks" regardless of the delivery method, I think you know that. – SaggingRufus Dec 6 '18 at 12:29
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    @mandy this is pretty clear cut, I don't think it requires the law SE – SaggingRufus Dec 6 '18 at 12:29
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Do I legally have to pay them back?

Yes, you legally have to pay them back.

If you approach them again and explain that you don't have the money in your account now, you would hopefully be able to come to some sort of repayment agreement.

With a $5000 erroneous "windfall" hopefully you can afford more than the $100 per week they initially rejected.

In most locales, your employer could simply deduct the excess wages from your next check, although most would agree to work with you for repayment. See: https://www.nolo.com/legal-encyclopedia/can-employer-deduct-previous-overpayment-paycheck.html.

If you are no longer employed there, then obviously they can't just deduct the money from your paycheck. And in that case, you could simply refuse to pay and force them to take you to court. That's not something I'd recommend, but I know some would take that route.

Note: I am assuming you are in the US. Local laws apply.

  • I wonder what the actual "repayment terms" are for returning accidental payments? Everyone always says "legally you have to return accidental payments" but - "with 7 days"? "in a reasonable time?" I wonder! – Fattie Dec 6 '18 at 8:16
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    As a reasonable person, if you changed jobs and found out that two companies paid you a full month of salary, you wouldn’t say “free money” and waste it, you would expect that someone comes back to you and you wouldn’t spend the money. So a reasonable time is “next time I go to the bank”. – gnasher729 Dec 6 '18 at 8:52
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    @Fattie I'm fairly sure the basic legal position is "It's their money and you owe it to them right now". But in a real court it is almost always up to a judge to order an appropriate repayment schedule. – DJClayworth Dec 6 '18 at 17:08
  • hi @gnasher729 . I guess you're right. That's an interesting discussion about what "reasonable" is. I'm wondering what the legal situation is, as a curiosity. – Fattie Dec 6 '18 at 19:33
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You have to pay them back. If you want to know the details of when and how, you could consult a lawyer or (cheaper and less reliable) ask on law.SE and tell them what country (state if in the US) you are in.

For practical considerations, they can't just take money from you. They'd have to go through the court process. They can't get money you don't have. You do have some wiggle room in negotiations. They'd like you to hand over all the money now, but it will be cheaper and easier for them if they have your cooperation. They will almost certainly compromise on something easier for you than payment in full in three weeks, but not necessarily accept the $100/week payment (which will take a year). I don't have any idea how much negotiating power you have, but it is some.

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