Last employer is claiming I owe them for my last paycheck
July 17, 2015 8:54 AM Subscribe
My official last day at my last position was at the end-of-June, so when a direct deposit came through on Wednesday, I figured it was the last check they owed me.
However, I just got a note from my former supervisor that this check was sent in error, and that I'm to pay back the gross amount and not the net amount (which is 35% higher). Is this correct? What is the best course of action here? Please help me navigate this issue.
If it was actually sent in error and it was basically that they just sent you an extra paycheck then you only owe them the net amount that was actually deposited, not the gross. They withheld the taxes and those are in their possession already.
Do your own accounting and make sure you have been paid for all your hours, if this is money you didn't actually earn then yes, you really do owe them the money back. If your accounting is different then respond in writing with your accounting and ask for their accounting and rationale for saying you owe it.
posted by magnetsphere at 9:07 AM on July 17, 2015
Do your own accounting and make sure you have been paid for all your hours, if this is money you didn't actually earn then yes, you really do owe them the money back. If your accounting is different then respond in writing with your accounting and ask for their accounting and rationale for saying you owe it.
posted by magnetsphere at 9:07 AM on July 17, 2015
However, I just got a note from my former supervisor that this check was sent in error
Is this a smaller company that doesn't have a formal payroll or HR person? I wouldn't speak to a supervisor about this but rather the person who handles payroll. To that extent, if you are paid (or overpaid) in error then yes you are required to return the money but as I said, I would ask to speak to the person who handles payroll.
posted by lpcxa0 at 9:08 AM on July 17, 2015 [1 favorite]
Is this a smaller company that doesn't have a formal payroll or HR person? I wouldn't speak to a supervisor about this but rather the person who handles payroll. To that extent, if you are paid (or overpaid) in error then yes you are required to return the money but as I said, I would ask to speak to the person who handles payroll.
posted by lpcxa0 at 9:08 AM on July 17, 2015 [1 favorite]
Best answer: Why would you need to pay them the gross? They pay the taxing authorities directly (source: my parents owned a small business, my mother did the books, and she called NY State and the IRS to pay them withheld taxes every week when she did payroll). They can only claim net pay from you. They need to pursue the rest with the IRS and the state in which you reside/work. Further, anything they paid on your behalf (health insurance, 401k) needs to be pursued by them with the appropriate companies.
I'd call someone in your previous employer's payroll department, and ask for a pay statement showing what they paid you and what was withheld. You should only have to pay them back net pay for days when you were not their employee (i.e. any time after June 30, or whenever your last day was).
You don't necessarily need to lawyer up yet.
A former employer of mine still owes me $40 gross pay from a job I had there in 1999 when my hourly salary was $1 more than what they actually paid me and they did not correct it for a week. I figure it's not worth the hassle to pay for a lawyer and go after them for what little amount I'd get after taxes were taken out of that $40. (That employer also withheld both NY and CA income taxes when I neither lived nor worked in California; I had to file with California that year to get that money back, so I'm not hopeful they'd correct this error either.)
posted by tckma at 9:11 AM on July 17, 2015
I'd call someone in your previous employer's payroll department, and ask for a pay statement showing what they paid you and what was withheld. You should only have to pay them back net pay for days when you were not their employee (i.e. any time after June 30, or whenever your last day was).
You don't necessarily need to lawyer up yet.
A former employer of mine still owes me $40 gross pay from a job I had there in 1999 when my hourly salary was $1 more than what they actually paid me and they did not correct it for a week. I figure it's not worth the hassle to pay for a lawyer and go after them for what little amount I'd get after taxes were taken out of that $40. (That employer also withheld both NY and CA income taxes when I neither lived nor worked in California; I had to file with California that year to get that money back, so I'm not hopeful they'd correct this error either.)
posted by tckma at 9:11 AM on July 17, 2015
Since it's within the same tax year, you can repay the net amount, rather than the gross amount (your state tax rules may differ). If you were paid in one tax year and refunded the money in a subsequent year, you have to repay the gross amount.
posted by melissasaurus at 10:07 AM on July 17, 2015
posted by melissasaurus at 10:07 AM on July 17, 2015
Chiming in to say yes, you should repay them the net amount, and yes, speak to the payroll person/company.
They also need to reverse the check through the payroll company, so that it's not on your W2 at the end of the year.
posted by needlegrrl at 11:12 AM on July 17, 2015 [1 favorite]
They also need to reverse the check through the payroll company, so that it's not on your W2 at the end of the year.
posted by needlegrrl at 11:12 AM on July 17, 2015 [1 favorite]
Make sure your W-2 is correct, when you get it.
posted by amtho at 11:17 AM on July 17, 2015 [2 favorites]
posted by amtho at 11:17 AM on July 17, 2015 [2 favorites]
1. Get absolutely everything on paper. What deductions were taken from this payment and why.
2. Did you get your final check and was it accurate?
3. You should be able to get some assistance from the PA labor relations board
and/or attorney general.
I can't think of a situation where you should have to pay back the gross, where you would likely have difficulty recovering the FICA.
posted by theora55 at 11:28 AM on July 17, 2015 [1 favorite]
2. Did you get your final check and was it accurate?
3. You should be able to get some assistance from the PA labor relations board
and/or attorney general.
I can't think of a situation where you should have to pay back the gross, where you would likely have difficulty recovering the FICA.
posted by theora55 at 11:28 AM on July 17, 2015 [1 favorite]
Why would you need to pay them the gross? They pay the taxing authorities directly (source: my parents owned a small business, my mother did the books, and she called NY State and the IRS to pay them withheld taxes every week when she did payroll).
The reason is because the company likely doesn't have a mechanism for recovering the tax paid. Its not the company's taxes its your (OPs) taxes which were paid, on OP's behalf, by the company and OP has a mechanism for recovering for any overages in the form of a tax return, company does not.
Note the whole check is a fuckup. In most states you need to be fully paid out on your last day or within 24 hours if forcibly terminated.
Note at this point most companies would just eat the mistake, its a dick move.
posted by bitdamaged at 12:21 PM on July 17, 2015 [1 favorite]
The reason is because the company likely doesn't have a mechanism for recovering the tax paid. Its not the company's taxes its your (OPs) taxes which were paid, on OP's behalf, by the company and OP has a mechanism for recovering for any overages in the form of a tax return, company does not.
Note the whole check is a fuckup. In most states you need to be fully paid out on your last day or within 24 hours if forcibly terminated.
Note at this point most companies would just eat the mistake, its a dick move.
posted by bitdamaged at 12:21 PM on July 17, 2015 [1 favorite]
Something smells here. I bet someone is hoping you'll help them fix (hide) their screwup. I agree with contacting payroll, and I also agree with remitting only what you received over and above what you were owed. Certainly not the gross, that's insane.
You need to know how much you were owed. Best if you know that without asking them.
Don't do anything you don't understand, and your first priority is making sure you get paid everything you're owed. Move slow and don't get bullied or bamboozled with bullshit.
An alternative to laywering up is contacting your state's Department of Labor. I would definitely contact them if you aren't satisfied with how your employer behaves next.
posted by mattu at 1:06 PM on July 17, 2015 [2 favorites]
You need to know how much you were owed. Best if you know that without asking them.
Don't do anything you don't understand, and your first priority is making sure you get paid everything you're owed. Move slow and don't get bullied or bamboozled with bullshit.
An alternative to laywering up is contacting your state's Department of Labor. I would definitely contact them if you aren't satisfied with how your employer behaves next.
posted by mattu at 1:06 PM on July 17, 2015 [2 favorites]
When this happened to me (was paid 100% rate instead of part time rate my last month) they forwarded me correspondence from Payroll with the number they wanted paid back. I probably should have asked for a more detailed calculation, but I ran the numbers myself and it made sense. Asking for the gross (which I assume would exceed the check amount) is definitely weird. Settle this with Payroll, not your former boss.
posted by Standard Orange at 9:48 PM on July 17, 2015
posted by Standard Orange at 9:48 PM on July 17, 2015
They're asking for the gross back because that's how much they actually paid you. Some of the money went to you directly and some of the money went to the IRS etc. to pay your taxes on your behalf. There might not be any way to get that money back until you file your taxes next year, at which point it would be included in your refund like any other over-withholding situation.
posted by Jacqueline at 6:07 AM on July 18, 2015
posted by Jacqueline at 6:07 AM on July 18, 2015
First go back and double check the work period being covered by the check - some employers pay you for the period before, not the one just ended. In this case, they may actually owe you one more paycheck after leave.
Second, if it was a mistake, it is not hard to get a refund of IRS and state taxes paid on your behalf when you file at the end of the year so that money is not lost. 401k contributions are also to the your benefit, although I'm not sure what it would take to get your hands on the cash. (I think there is a way to withdraw money if the total contributions are over the legal limit but that is not likely to apply if you end being unemployed for a while.) However, other deductions such as medical insurance are a problem because you don't get the benefit of that insurance protection if you are not an employee, even if the premium was paid for you. So, you would want to look at the deductions line by line see which create annoying problems of cash flow and which one really leave you out of pocket because of their mistake.
The good news is that whatever you decide, you get to write them a check for what you believe is the correct amount and then leave to them to decide if it is worth coming after you for the difference - much better than the other way around where they owe you money.
posted by metahawk at 3:47 PM on July 18, 2015
Second, if it was a mistake, it is not hard to get a refund of IRS and state taxes paid on your behalf when you file at the end of the year so that money is not lost. 401k contributions are also to the your benefit, although I'm not sure what it would take to get your hands on the cash. (I think there is a way to withdraw money if the total contributions are over the legal limit but that is not likely to apply if you end being unemployed for a while.) However, other deductions such as medical insurance are a problem because you don't get the benefit of that insurance protection if you are not an employee, even if the premium was paid for you. So, you would want to look at the deductions line by line see which create annoying problems of cash flow and which one really leave you out of pocket because of their mistake.
The good news is that whatever you decide, you get to write them a check for what you believe is the correct amount and then leave to them to decide if it is worth coming after you for the difference - much better than the other way around where they owe you money.
posted by metahawk at 3:47 PM on July 18, 2015
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-They messed up - why do I need to pay them the gross?
-Is there a better way to handle this? How have you handled this in the past?
posted by glaucon at 8:55 AM on July 17, 2015