Employer screwed up my payroll for 8 years.

So....I just got a call from the payroll department and apparently they've been "over paying" me for 8 years and want to discuss repayment.....Can they do that?

Basically the company offers a 401k match and whomever set mine up fat fingered it and they're matching more than they should be. This comes up to about $10k over 8 years.....Can they even do that? Can I tell them to suck it and eat their mistake?

I probably need to get an attorney involved if they don't want to be reasonable, and I'm sure that'll go well for my advancement from within the company.

 

Tell em

 

I'd recommend getting an attorney involved anyway. Most companies will look out for their bottom line and not the individual employee. Fair is fair and if you were overpaid then how is that fair to them? At the same time you want there to be some middle ground where you won't have to adjust your way of life to repay something that was not intentionally or illegally taken from your employer. A sever pay cut could damage your family's well being and that should be taken into account when discussing a payment plan.

Thing that could also affect both sides would be if it's a big corporation or a small, family-run business.

 

I'm not an attorney but you probably have no recourse. It is just like getting a bigger paycheck by error...you can't just keep it. Just have them not match you going forward for what they erroneously matched you before.

 

It's been a good company for 8 years and I'd hate to walk over it, but I'm not pleased....

I guess I see both sides, but it breaks down to like a ~$25/week spread over 8 years. Heck it was small enough that I didn't catch it and I watch my statements. I guess we'll see what kind of "agreement" we can come across.

 

If I were you I would delete this thread and just contact a lawyer who specializes in these types of issues. I hope it works out for you and the company decides to take it as a loss, after all it was their mistake and not yours.

 

Yes, they can make you repay it. However, it is unreasonable for them to expect you to repay it immediately. You will need to set up a payment plan, and get an attorney if the plan they propose is not to your liking.

 

THIS. let that 10k they already gave you keep earning its interest in your 401k and reduce the amount they give you in the future to compensate.

 

They can do it. Take the $25 repayment plan. That 10k will be far more valuable in 30 years with compounding interest than the 10k you pay back.

 

The over pay was in matching funds from their side, correct? Into your 401?

The resolution should not reflect in your cash flow at all.

A lump repayment from your 401 (where the money is) creates a mess for you in both normal taxes and early withdrawal 10% penalty.

A lump repayment from your personal cash is unfair, as you would be paying back with post tax dollars, plus those funds were never part of your cash flow to begin with.

While they likely have a legal right (and you have an ethical one) to repayment of the funds, I'd argue that what they deserve back is what they overpaid, not any growth. The basis for that argument would be if the time period had suffered a loss, would they be willing to absorb that? Of course not. So they shouldn't get any gain either.

In other words they get the principal only.

Assuming the correct matching number something greater than the $25/week you mentioned; as a rough example, let's say they've been matching @ $65 a week, and that should have been $40. Ask them to match you at $15/wk for the next eight years until they have recouped.

I know that # is different, as matching is generally % based and moves along with your pay. So what they'd actually do is calculate the correct match for a given year, less the $25. Repeat each time there is a match calculation change. For the exact number of months that it was paid in in error.

At that point you return to your correct calculated match.

 

I'd recommend NOT doing that.

What I'd recommend is getting a firm grasp of the concepts I outlined.

They are coming to you. Let them make the first offers of remedy and see how it goes. It could be favorable to you. IE enter with an 'exploratory' mindset, not a defensive one.

If the terms they offer are not equitible, then use the info above to address specific concerns, in your own words.

Don't go in sounding like you've talked to a professional (And you haven't. Not here anyway) and put them on guard. Be prepared, but listen, ask questions and consider all options.

If you don't feel comfortable, ask for some time to consider, and just don't sign anything in that first sitting.

At that point if you feel they are being unfair, it maybe worth speaking to an actual pro like a Financial Attorney. But be careful. Don't let fees cost you more than what you are trying to protect.

 

Contact whatever company manages your 401k and discuss with them. See if they will do the calculations on there end and see if it's the same figure.

 

I hope so. I've danced around the fringes of stuff like this for a long time and absorbed a lot via osmosis and question asking.

I do have some attorney family and have used another special attorney, as well as a CPA and a financial planner

And I slept at a Holiday Inn Express once. I think.

 

What's the biggest tire I can fit on $25 a week without trimming?

 

Wrong forum.

He properly posted in 'jobs and careers', not 3rd gen.

 

Yep, they've been over matching for 8 years.

It's a small company and our one person accounting department is the only one that I've talked to. The owner/ceo may not even care to pursue repayment, but I'd rather be prepared for that sit down and need to stall the discussion until I can talk to a CPA/Attorney to figure out the easiest option.

 

I had that happen to me on one check. They matched what someone else was putting in and not mine. Since it was only one check it wasnt much. They sent me a form that i had to sign saying that i agreed and they took it back out. I cant imagine an 8 year span.

 

I'd suggest not spending any money pre meeting.

As I suggested, you might come to a very acceptable conclusion on your own.

And if you don't feel comfortable with what you hear, there is no obligation to sign anything on the spot. There may be pressure, but no legal basis.

Then go consult your professionals.

Good luck!

 

well i remember a time it used to be 2nd gen

 

My previous employer (retired) did this on a smaller scale, two years.
Yes they can get their money back, but they can only make you pay at the same rate that the overpayment occurred. So that would be $25 a week for eight years.
Call it job security.