Must an overpaid employee give the money back?
August 14, 2006 10:45 AM   Subscribe

Is an employee who is overpaid legally obligated to give the money back?

We have an independent contractor who does work for our office and who was inadvertently overpaid the last time she worked here, by about a couple of days' worth of pay. Rather than write a check, she's in here now working it off. Which makes me curious: what would happen if she just said, "Screw you, the money's mine."? She's not going to do that, because she wants to keep on doing work for us, but I'm having trouble finding out what the law is here. This is in Maine; I can't find anything in the Maine Statutes or on Maine's Department of Labor site. Google is no help on the federal level, and I can't find anything on the federal DOL site either.
posted by JanetLand to Work & Money (6 answers total) 1 user marked this as a favorite
The search difficulty probably has something to do with the fact that "contractor" != "employee". Different laws apply. I doubt either a state or federal Department of Labor would even be applicable, since by definition the person's relationship to your company is not as "labor" but as an independent business. It's a B2B issue, not an employer/employee issue.
posted by nakedcodemonkey at 10:54 AM on August 14, 2006

Here's a fairly exhaustive list of questions on FindLaw in regards to employee overpayment.

One of the posters on the message board linked to this document which might give you what you're looking for.
posted by purephase at 11:01 AM on August 14, 2006

If she's an independent subcontractor, then yeah, employment law isn't going to be involved at all.

It would be a negotiation thing: "that was a mistake, we both know it, so unless you want that to be the *last* $600 you get from us, yadda yadda..."
posted by baylink at 12:00 PM on August 14, 2006

The independent contractor normally takes it out of the employment law realm. It depends on what the contract says, or implies.

The truth is this--it wouldn't be worth the legal fees and she'd walk off with the money.
posted by Ironmouth at 12:03 PM on August 14, 2006

The same thing that happens if I inadvertently overpay a supplier. In a reasonable world, the supplier shows it as a credit against future purchases, or writes a refund check. If the supplier vanishes or goes bankrupt, I can't recover my money.
posted by theora55 at 2:58 PM on August 14, 2006

The law of mistake isn't going to produce a meaningfully different result in the employer-employee or the vendor-purchaser context. If you provide reasonably timely notice, you'll be entitled to the overpayment back. The only time it gets dicey as a legal matters is when the payee alleges that the payment wasn't a mistake, or seeks to apply to some other claim he or she has against you.

(This is to say nothing of the nasty problem that arises in employer-employee overpayments: dealing with the payroll taxes and other withholdings.)
posted by MattD at 4:25 PM on August 14, 2006

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