Legal Black Hole: Overpaid Employees

It seems at least once every year I have to help advise an individual who has been mistakenly overpaid.  In most circumstance, the individual comes to me because they have been notified that their employer is going to unilaterally begin garnishing their paycheck to make up for the overpayment.  For some individuals, the amount removed from the check is small enough not to have much impact but for many public school employees the loss (which sometimes represents years of overpayment by the employer) can place the individual into a very precarious financial position.  This is particularly true in Missouri which has the 9th lowest average teacher salary in the nation.

These individuals are usually shocked because they were not even aware that an overpayment had occurred.  While salary schedules for employees seem clear, when you begin to add in amounts for extra duty contracts and then remove insurance costs as well as federal, state, and possibly even local taxes, it can be extremely difficult to tell whether you are receiving the correct amount.  Additionally surprising to the employee is the fact that their employer can unilaterally decrease their income without any real recourse.  Unfortunately, these individuals have fallen into a gap in the law, a legal black hole.

Recent scholarship from an Associate Professor at the University of Houston Law Center, Jim Hawkins, attempts to draw more attention to the situation.  The article, titled “Law’s Remarkable Failure to Protect Mistakenly Overpaid Employees,” begins by acknowledging that individuals who have been overpaid have essentially been turned into unintentional debtors to their employer.  However, the debtor who may rack up credit card debt or take on too large a home mortgage has a wide body of laws and protections that are simply unavailable to the unwittingly overpaid employee.

Unfortunately, there are no simple answers to this situation.  The article lists two potential solutions: 1) courts could adopt modifications to “restitution” (also known are repayment) standards; or 2) legislatures could adopt simple reforms to how over-payments of employees are treated.  While these are both relatively mild changes to the law, they still require consideration of the plight of these individuals and action by those in the legislature or judiciary.  This article goes a long way toward increasing the visibility of the issue and I hope many people read it and talk about their own experiences and feelings on this issue.

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