If I am overpaid by my company, I don’t have to pay them back if the legal doctrine of estoppel applies. Part of the estoppel is that they indicate that I was paid correctly. But what exactly does that mean? The paycheck is processed by an outside company so do I need a signed affidavit from the company verifying they believe all of the checks were correct or is the fact that they didn’t ask for the overpayment of $40 paid back in the last 2 weeks sufficient?
If it matters, the error is from a calculation error not a wrong rate/time error.
What estoppel means here is that you need to pay them back or you’re going to lose your job and be put on their ‘do not hire’ list, and possibly sued for the money you owe them if they can’t take it out of your last paycheck. I’m not aware of anywhere that a defense like you’re trying to mount worked in court, and in practice the company will fire you for cause rather than mess with a lawsuit over a small amount of money.
It works in the UK and I thought the US estoppel was similar. Although based on a situation (which is why it is in IMHO) I thought of the question more out of theory than practice. Ultimately this will be handled under the legal theory of “Don’t lose your job even if it’s the company that screwed up”.
In the US at least, a company that overpays you has the right to recoup that payment at any time, up to and including from your last paycheck, as long as they give you notice in advance that they are planning to do so. The cannot just remove it from a subsequent paycheck without informing you that they are doing so and without proving to you that the error is legit if you press the issue.
If they don’t catch the error until after you’ve left the company, they can still take the matter to small claims court to collect the overpayment, if they choose to do so, and even if it was their error, they will win.
We recently had this exact same issue occur with an employer who resigned, but was still serving out his notice. We caught the error before he left the company, explained it to him and provided proof of the error, and collected the money from his final paycheck.
Large dollar amount errors may require further measures, but for small amounts such as the $40 you mention, the procedure is very cut and dried.
I can understand that there exist a large number of people for whom $40 is a significant amount of money, but my first thought when reading the OP is that even–perhaps especially–if you’re one of them, your job is worth way more than that amount. Why would you even consider arguing about this? It was an error, give it back.
My paycheck and my expense reimbursements are paid via direct deposit. Every time I enter an expense report, I have to check a box allowing the company to pull money out of my account in the event of an error or overpayment.
If you know you were overpaid, why would you not do the right thing and report the error? I strongly suspect that if the company shorted your pay you’d be on the phone to Payroll before the ink was dry on the check. It works both ways.
The CJS elements for estoppel are: “(1) a representation as to a material fact that is contrary to a later-asserted position; (2) reliance on that representation; and (3) a change in position detrimental to the party claiming estoppel, caused by the representation and reliance thereon."
If the company says you have been paid correctly, and you rely on that representation, you may be entitled to keep the money if their later change in position causes you a detriment. However, courts are generally loath to find estoppel, particularly when both parties have equal knowledge of the facts underlying your representation. If you are paid by the hour, you should know how much you are earning.