Spouse's insurance not deducted from paycheck for over 6 months....

September 8, 2014 10:52 AM

Apparently my payroll hasn't been deducting my spouse's insurance premium from my paycheck since when my insurance kicked in starting in April. I didn't realize this in the flurry of deductions and taxes from my paycheck. When I started, I asked my boss what the insurance benefit is at my work. She said it was 100% covered for me by the company but that I was in charge for paying for my spouse, which I'm totally fine with but thought it would automatically come out of my paycheck.

In April, my insurance benefits kicked in. It is now September and I have a new boss who just emailed me and said that it has come to her attention that the company has accidentally been paying my spouse's insurance all of this time and I need to pay the company back. I thought it had been coming out of my paycheck all of this time. I went back and looked at my pay stubs and she is right. It turns out our bookkeeper incorrectly set it up (she has now moved on from the company) and our new bookkeeper found out the error. What is my recourse? Do I just have to pay back the 6 months of premiums? It is a HUGE chunk of change for me and I do not have the extra dough all at once now. Thanks in advance, I know you are not my lawyer, or my accountant, or my insurance agent. This is a big mistake and I'm a little shaken up. What to do?

posted by rabu to Human Relations (16 answers total)

What is my recourse?

Nothing, practically. You have not been harmed by your employer, since they are only asking for money that they should have been paid.

Do I just have to pay back the 6 months of premiums?

Yes, but your employer may be flexible about repayment terms. If they are not flexible, you should have your manager advocate for you due to the company's error.
posted by saeculorum at 10:57 AM on September 8, 2014 [4 favorites]

It's their big mistake, not yours. I would bet they'll work with you on a repayment schedule.
posted by jon1270 at 11:00 AM on September 8, 2014 [2 favorites]

Do I just have to pay back the 6 months of premiums?

Yes, but you can probably do this over time. Obviously this is frustrating and annoying but it doesn't seem like there was anything going on except an honest error (theirs and yours) and now it's "make it right" time. You aren't out any additional money, this is just inconveniently timed. I'd try to phrase it like "I see what happened. Unfortunately, paying this all out at once isn't something I'll be unable to do because of $REASONS. Is it possible we can work out a payment plan, say $X per month until I'm paid in full?" Since the bookkeeper has moved on you both have the option of basically hanging this at their door and trying to be fully cooperative with each other moving forward.
posted by jessamyn at 11:03 AM on September 8, 2014 [3 favorites]

Ask.

I had a similar issue, except nothing was being taken out and I just didn't notice (I was in the middle of moving, there'd been some other stuff we had to fix) and there was just no way, I was flat broke at the point they noticed. I asked for 4 months, and I should have asked for longer because I didn't think about my check being down the correct amount in the first place before the repayment.

I let myself feel guilty about not noticing, don't do that. Offer a payment plan that's not going to kill you, and be firm but polite. Obviously they could take it all at once, you want to appeal to their good will.
posted by Lyn Never at 11:04 AM on September 8, 2014

This exact situation has come up at my work. When I found the error it was obvious it was on our end. Our company ended up eating the cost and billing the proper amount going forward.

Technically you are on the hook for this money, since it was your end to pay in the first place, but your company should be very friendly/flexible about the hows and whens of getting it paid back, since it was their fuckup.
posted by phunniemee at 11:05 AM on September 8, 2014

You do need to pay the money back, but the company will likely work with you by upping the monthly deductions until the amount is paid off.

I had an employee at the company have something similar happen with her a few years ago - and they adjusted the payment for a year to make up what was missed and it wasn't as much as a financial hardship or a huge chunk of change at once.
posted by Sara_NOT_Sarah at 11:20 AM on September 8, 2014 [1 favorite]

Yes you owe it. When that happens here however, we always work with the employee so it is not so much of a burden on them, usually even if it is the employees fault. I respond best to stuff like this when the employee is honest about noticing and asks nicely what their options are.
posted by domino at 11:23 AM on September 8, 2014

Be careful that they're not asking you to repay them with post-tax dollars. If these premiums were a pretax benefit, the money should be taken out the same way.
posted by JoeZydeco at 11:25 AM on September 8, 2014 [19 favorites]

If you feel morally or ethically obligated to fix the company's error or you really want to remain employed at this particular company, talk with them about repayment options. They should be incredibly flexible and they should absolutely not ask for a dime of post-tax money. In any case, I wouldn't make any promises until they've presented, in writing, an agreement that you can live with. I wouldn't agree to anything verbal at this point.

If any of the above aren't true, consult an attorney, who can determine whether you're actually legally obligated to pay the company back (something nobody here can actually tell you) and, if you are, how to negotiate the best repayment plan with them.

Frankly, I'd probably start looking for a new place to work. If the company is going to punish you for their mistakes (and this is their mistake), they are either not particularly interested in keeping you or they're running so low on cash that this is a good time to bail before things get much worse.
posted by toomuchpete at 11:34 AM on September 8, 2014 [1 favorite]

toomuchpete, I myself have worked in payroll at Fortune 100 companies where this kind of thing happened. People make mistakes, even people in payroll. It's hardly a harbinger of doom by itself.

This is not a mistake made exclusively by the company - it's a mistake made on both sides. The OP didn't check to make sure all the deductions were happening (don't feel bad, OP, people rarely do) and the company didn't set up the deductions correctly. There's no reason to go to a lawyer about it - I assure you it happens all the time.

The OP needs to see about setting up a reasonable repayment schedule and make sure it's not taken out in post-tax dollars.
posted by winna at 11:44 AM on September 8, 2014 [2 favorites]

paying this all out at once isn't something I'll be unable to do because of $REASONS

You don't have to give a reason that you can't pay it back all at once because it is none of their business. It is understandable to want to offer reasons, but that just gives them room to argue. What you do with your paycheck is none of their business.

I'd ask for 5-6 months (the same amount of time they took to notice) so you are essentially paying double the premium for the same amount of time you paid zero. However, you may want to get it all paid off before the end of the year if you were paying pre-tax premiums.
posted by soelo at 11:46 AM on September 8, 2014 [2 favorites]

Be careful that they're not asking you to repay them with post-tax dollars. If these premiums were a pretax benefit, the money should be taken out the same way.

This this this!! Very important, as it will increase your tax liability if they don't do it pre-tax as they should.
posted by rabbitrabbit at 11:56 AM on September 8, 2014 [4 favorites]

When we've had employee payment errors, we usually try to get it fixed up over the course of 3-4 months (obviously not if it's 30$ or something, but we try to keep repayments to <5>
Just say yes, and you'd like to pay it back over 6 months (or: between now and December, for personal taxation year convenience).
posted by jeather at 12:03 PM on September 8, 2014 [1 favorite]

When something like this happened to me, my employer informed me and then charged extra out of my pretax dollars without my having to do anything until everything was appropriately paid up. They even told me how many paychecks it would spread across.

I recommend you ask them to do it this way to 1) make sure it's still taken out of pretax dollars and 2) to take less of a budget hit.
posted by zizzle at 12:46 PM on September 8, 2014

Since I screwed up my html, what I meant is that we try not to charge people more than $50 per paycheque (paid every 2 weeks) for screwups that are our fault (on pay that usually ranges from 1800-2800 for the period). Most employers just want to get the money back, not make life extra hard for their employees. Obviously if you leave in the middle of the repayment schedule, you will have to pay back all the remaining owed at once.

(We do, however, pay back any underpaid amounts in one lump sum, which happens occasionally due to errors or more often to delays in union negotiations. We neither charge nor receive interest for these things.)
posted by jeather at 1:59 PM on September 8, 2014

This is money you owed anyway. Not paying it isn't an option. But you can say it's a big hit to pay all at once and ask if they can deduct double for the next six months to pay off the balance gradually. They should be willing to do that, especially since it took them so long to notice.
posted by AppleTurnover at 2:28 PM on September 8, 2014