Employer demanding money back when I resigned because of "accidental pay raise"

Question

I signed on with a large Canadian tech company about 6 years ago, and submitted my resignation (company pays well, but new management was installed about a year ago, and they're very abusive, vulgar, and ineffective). About 3 years ago (under my old, competent/kind boss), I received a pay raise from $150,000/yr to $175,000/yr (i.e. on my "awards statement").

However, when I logged in to the HR web portal a few weeks after being awarded the raise, I noticed that I was instead being awarded $195,000/yr. I honestly didn't think about it, since it was a really good year for me (i.e. I saved a large project, and literally millions for the company), so I thought this was deliberate, and continued working diligently at my job (I'd still be there if management wasn't so horrible).

My employer has informed me that this was a mistake (they won't communicate it in writing), and are holding my final pay cheque and owed/banked vacation time, and sent me an invoice demanding the "excess" (roughly 3 years @ $20,000; amounting to a little over $60,000, plus a 5% annual interest rate compounded annually, pushing it up to about $66,000) before they will "honor my letter of resignation". They keep e-mailing me these forms they want me to sign that will provide a 6 month "payment plan", and couriered copies of it to my house.

Is there anything from employment laws/standards I can cite to get them to go away, or can they seriously demand I pay them this money?

Answer 1

Go see a lawyer.

My employer has informed me that this was a mistake (they won't communicate it in writing)

As a general rule, when companies have the force of law on their side (and even when they don't) they send demands in writing. When they don't, it is usually because they are doing something they don't want someone to see.

Who that someone maybe is up in the air. If this is a large tech company, they would scare away a lot of talent if this behavior hit the news, so maybe they are avoiding more senior management. Maybe they are avoiding HR or legal for their own company.

and are holding my final pay cheque and owed/banked vacation time

This could easily be viewed as pay theft and in that case, they are avoiding the government. Pay theft is treated very harshly by the government to the point that the Board of Directors of the company is PERSONALLY LIABLE for unpaid wages. Now, you cannot successfully sue them instead of the company without first failing to collect from the company, but those board members will be questioning the company about receiving a letter reminding them of their legal obligations (this is something your lawyer might do).

In addition, depending on the size of this tech company (this wouldn't work on an Amazon or Uber or any public company), this kind of thing can hold up investment deals, trigger demands for audits from major investors, cause alarm in the offices of holders of company debt, etc. In Canada at least, not paying employees is a sign of imminent corporate failure.

However, there are laws which do allow for the collection of overpayment, but it would be interesting to see whether they would still hold after overpaying you for three years.

Go see a lawyer. Do not capitulate without exhausting your legal options.

Go see a lawyer.

Answer 2

Is there anything from employment laws/standards I can cite to get them to go away, or can they seriously demand I pay them this money?

Yes, see below.

The government can probably force them to pay what they owe you, and perhaps, even tack on an extra administrative fine of 15% for not having paid you on time in the first place.

Will that make them go away entirely? Probably not. But once they pay you, they'll lose most of their leverage since the burden will be on them to prove that a mistake was made, and even if they win, they will still have the problem of collecting from you.

Read this:

1. The wage recovery system

The wage recovery system is a legislated tool for the collection of an employee’s unpaid wages or other amounts owing. The system also provides an administrative review process and an appeal mechanism to parties who disagree with an inspector’s findings.

2. Handling cases of non-payment of wages

The Labour Program assigns an inspector to investigate any complaints filed by an employee within six months from the last day the employer was required to pay the wages.

3. Actions taken by an inspector

An inspector investigates to determine whether a complaint is founded. If the monetary complaint is founded, the inspector attempts to have the employer voluntarily pay the wages or other amounts owing before issuing a Payment order. If the employer voluntarily complies, the inspector may issue a Notice of voluntary compliance. If the complaint is unfounded, the complainant (employee) will be notified of the inspector’s finding in writing. A Notice of unfounded complaint may subsequently be issued to the complainant.

4. Administrative fees

When a Payment order is issued to an employer, an administrative fee of $200 or 15% (whichever is greater) will be added to the wages or other amounts owed.

5. Director’s liability

When wage recovery from a corporation is impossible or unlikely, directors may be held liable for amounts due to an employee or employees during their incumbency. Corporate directors are jointly and individually liable for employees’ wages and other amounts owed, such as severance and notice pay, up to a limit equivalent to six months’ wages.

[...]

source

Quote this page, but whatever happens. Do not admit to anything yourself (not even on the phone). As far as you're concerned, they've committed wage theft. Be a broken record. Do not say anything else.

Also, don't just quote the page. Make the complaint with the government agency. I have the feeling that a quick phone call from them will probably solve everything much more quickly.