Overpayment - Yikees!!!!

JudyRoy

[font size="1" color="#FF0000"]LAST EDITED ON 02-24-03 AT 09:45AM (CST)[/font][p]Our payroll clerk keyed in $850 per hour instead of $8.50. Needless to say one employee grossed over $28,000 and received a check for over $14,000 which she promptly cashed and spent. She has returned a small portion of the overpayment but now want us to take the balance out in "installments." Frankly, we want our money back, but we also want to fire her. Is this legal? Or do we have to keep her on and provide her with an interest free "loan"?

Rockie

I guess my first question is: Why did the employee feel it was her right to cash and spend this money since it was an obvious error? (The speed at which she cashed the check and spent the money is a good indication that she knew it was wrong). In my estimation, this is the same as stealing from the company. I would ask her to go get a bank loan to repay this instead of making interest free installment payments to you. You might ask her: "If someone presented you with an $850 bill when you knew it should be $8.50, would you pay it without question?" If she refuses to repay, you probably still have some legal avenues you could proceed with to get your money back. I would sincerely question if I wanted an individual with this type of ethics working for me.

We had some similar situations when I worked in banking. I'll never forget we had a retired colonel who had his social security checks directly deposited into a savings account that he rarely looked at. He happened to check it one day and found that his last few checks had not been directly deposited. We did an audit and found through a "keying error" that these checks were now going into the account of a young 25 year old single airman. He was having himself a high old time on the colonel's money. His CO approached him about why he spent this money knowing it could not possibly be his and his response was "well, the bank put it in my account, so I thought it was mine!" Warped thinking!!!

Needless to say, this young man got into all kinds of trouble with the air force as they considered it a theft as well. He had to make arrangements to borrow the money he had taken and he had disciplinary measures taken against him from the air force.

It's amazing the way some people's thought processes work.

Whatever

You have several options: 1. Let her keep her job and make small repayments 2.Let her keep her job but insist that she repay the overpayment immediately
3. Write off the loss and fire her (If she isn't working and is ineligible for unemployment insurance, she can't repay anything). 4. Fire her, talk to attorney about criminal charges and the insurance broker to see if the company has theft insurance.

I am amused that an employee who rapidly spends a $14,000 check has the chutzpah to tell the employer how they would like to repay the money.

Balloonman

She may or may not have assets (a house) that you could place a lien on. I would let her know her employment is terminated, and if the full amount is not repaid within 10 days that you will proceed with criminal charges.
MY $0.02 worth.
DJ The Balloonman

LindaS

I would go ahead and terminate her. There's no way she can claim she didn't know the check was an error and that is not the kind of person I would want working for me. Regarding her paying it back, I think the best chance you have, if she can't or won't obtain a loan to pay back the money, would be to proceed with criminal charges. This is no different than if she walked into the accounting office and stole the money from the cash box.

Out of curiousity sake, what did she spend so much money on so quickly?

JudyRoy

Apparently she paid overdue bills. Her phone had been turn off and her rent was past due. At least this was the her story. We gave her five days to come up with the money, but I feel her chances of getting a loan are poor to not at all.

pecohr

This is theft pure and simple. Explain to her that she has a reasonable time frame (say a couple of working days to arrange a loan from someone) to return the companies money given to her in error. Also let her know that if she fails to comply that steps will be taken to criminally procecute her for theft/misappropriation of company assets. I would also use the same meeting to explain that she is being terminated for gross misconduct(Theft).

I think you are very likely never going to see any money from this individual and would recommend trying to get reimbursed via your insurance carrier ( but wouldn't hold my breath on that one).

I think I would discuss this situation as a performance issue with the payroll person also...

HRsage

We all know that the ee is clearly in the wrong, but I always try to see how things would be played out in court. Do you have any statements or documentation from the ee that they knew it was a mistake? How did she rationalize her cashing the check? I could picture her saying in court that she felt it was somekind of bonus or something and she didn't think it was wrong. A 14,000 dollar bonus is obvious b.s. but still something to consider. No lawsuit surprises me anymore. She'll say it's wrongful termination, it's not her fault she just cashed a check made out to her, she thought it was okay, blah, blah, blah. But it is stealing and you don't want that person there, I would give her the ultimatum of doing a one time payback, it was paid to her one time not in installments. It she won't do that then I would term. This is a good one, (sorry for you having to deal with it though) but keep us posted on the outcome.

HS

Yikes indeed!!!!!

I would consider this employee to (at the least!) have very poor judgement skills and term them immediately. I agree with the previous posters to this thread that it could be considered stealing. I'd check with an attorney to be on the safe side, but I see no reason not to term. As far as getting the money back, that's a different story. If they are not being termed, then yes, you could garnish their wages a certain amount each paycheck. Personally, I'd want the money back right away, they had no right to go out and spend that money. What did they buy for 14 grand anyway that they can't pay any of it back? Could they return what they bought and pay you back that way?

I wish someone would make that kind of mistake in my paycheck!!

hrbanker

Actually, this happened to me shortly after I moved into the HR mgr position. Payroll was handled in another dept and they put through an increase incorrectly for me. The two week gross pay was almost $100 grand and the net was $56,000. I went to my boss immediately and told him he was finally paying me what I was worth.

System

JudyRoy and hrbanker -- Can I come to work for you? Just for a week or so....
$$$

James Sokolowski
M. Lee Smith Publishers

HRGirl

You have two issues to deal with. One the ee with 14 grand and the payroll person responsible for the error. A 14 grand check is an obvious mistake, everyone knows how much they make and what a normal pay check should be from week to week. No one gets a bonus like that unless you own the company, come on get a clue! This is theft, simple as that.

The person in payroll that made that 14 grand mistake has some answering to do as well. I do payroll for my company, and I have more than one double check for accuracy on my payroll. Did they not check the payroll? If this is the case, someone had better start a policy on checking it after they complete it. Not only do I check my own payroll, but my manager checks it as well. We call it 2PI (second pair of eyes). I don't know if you outsource or do payroll inhouse, but either way there should be some kind of check for accuracy to ensure these kinds of mistakes don't happen.

rla

I agree with the advice to terminate - we would seek council and terminate immediately. But my first response would be to talk to my payroll department - they should catch a mistake of this magnatude when they batch total the payroll! There would be revamp of the payroll procedure to prevent future problems of this nature.

Dasher

What a story! Who signed this check? Your payroll department and the departmental director has some explaining to do. If the person had time to cash and spend the money -- your system needs some major overhauling. Sorry to be so blunt. Also, to allow your company to keep an employee with ethics like your $14,000 payroll casher is just asking for trouble. File criminal charges and claim employee dishonesty via your insurance company, as well.

JudyRoy

We have automatic check signing. Although I'm not sure even if we had a real signature with some 300+ checks that it would have been caught.

JudyRoy

We batch by hours. However, we have implemented perameters for total amount of checks and a maximum for the hourly rates. Don't worry, this will not happen again!!!!!

HRsage

Did she admit to knowing that cashing the check was wrong? How did she rationalize (or try to) cashing a $14k check? ( A bonus was just an example of a bogus rationalization, as I stated earlier) If she knew it was wrong, get it in writing, the more you have documented the better. It's appears that she has issues with money, so you probably won't be getting anything back in 5 days.

Crout

If the money isn't important, then by all means fire her. She is clearly wrong. However, if you fire her now you might not get that money back for years, if ever, and end up with legal fees to boot. It might be a good idea to try and work with her to make restitution, although I do like the idea mentioned above of threatening her with criminal prosecution unless she gets a loan and repays immediately. Maybe working with her can be your fallback position if threatening fails. How do you think her credit rating is? Do you think she could even get a bank loan?

JudyRoy

Probably not! I understand that she used the money to pay off all her debts. Her phone had been disconnected, and rent was past due as was her credit cards. So, probably she won't be able to get any type of loan.

pecohr

Her credit should be getting much better now since she used your funds to pay down her debt's x}>

sorry couldn't resist...

Balloonman

If you have someone you know that is skilled in interviewing/interrogating you can get a signed statement and restitution agreement. You can probably get that through a general conversation with her. How well it holds up will depend on a few things. First do not threaten her or promise her anything, and make sure at the end of her statement that she puts it was given of her own free will not under duress and no promises were made. Then fire her and give her a week to come up with the money or tell her you will prosecute her, make sure she understands that it will be a felony and what the possible consequences are. (Do your research)
She may have parents or someone who will co-sign a loan or lend her the money. It will also send a strong message to everybody that dishonesty will not be tolerated.
Do not let anything cloud the fact that this person is a thief.
My $0.02 worth.
DJ The Balloonman

Crout

I think that DJ is correct, of course, but I have a feeling that if you go this route you will never see a nickel of that money. It might be worth it for the "message" value, however, and justice will have been served. That's not such a bad thing.