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Wage Overpayment

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  • Dec 6th, 2017 8:39 pm
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[OP]
Newbie
Dec 3, 2017
22 posts
I appreciate everyone's insight here. To make it clear, I'm not trying to justify or "steal" the amount I was overpaid. I do however, believe there is some culbaility on the employer's part, due to the length of time elapsed and how it was handled. I'm probably just naive with regards whom and how our laws protect though.

I also found this. Looks like they weren't allowed to deduct the amount I "owe" off my last paycheck? (from the employment standards act Ontario)

Deductions, etc.
13 (1) An employer shall not withhold wages payable to an employee, make a deduction from an employee’s wages or cause the employee to return his or her wages to the employer unless authorized to do so under this section. 2000, c. 41, s. 13 (1).

Statute or court order
(2) An employer may withhold or make a deduction from an employee’s wages or cause the employee to return them if a statute of Ontario or Canada or a court order authorizes it. 2000, c. 41, s. 13 (2).

Employee authorization
(3) An employer may withhold or make a deduction from an employee’s wages or cause the employee to return them with the employee’s written authorization. 2000, c. 41, s. 13 (3).

Exception
(4) Subsections (2) and (3) do not apply if the statute, order or written authorization from the employee requires the employer to remit the withheld or deducted wages to a third person and the employer fails to do so. 2000, c. 41, s. 13 (4).

Same
(5) Subsection (3) does not apply if,

(a) the employee’s authorization does not refer to a specific amount or provide a formula from which a specific amount may be calculated;

(b) the employee’s wages were withheld, deducted or required to be returned,

(i) because of faulty work,

(ii) because the employer had a cash shortage, lost property or had property stolen and a person other than the employee had access to the cash or property, or

(iii) under any prescribed conditions; or

(c) the employee’s wages were required to be returned and those wages were the subject of an order under this Act. 2000, c. 41, s. 13 (5).

Priority of claims
14 (1) Despite any other Act, wages shall have priority over and be paid before the claims and rights of all other unsecured creditors of an employer, to the extent of $10,000 per employee. 2000, c. 41, s. 14 (1).

Exception
(2) Subsection (1) does not apply with respect to a distribution made under the Bankruptcy and Insolvency Act (Canada) or other legislation enacted by the Parliament of Canada respecting bankruptcy or insolvency. 2001, c. 9, Sched. I, s. 1 (3)
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Mar 23, 2008
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nileskramer wrote:
Dec 5th, 2017 3:19 pm
I appreciate everyone's insight here. To make it clear, I'm not trying to justify or "steal" the amount I was overpaid. I do however, believe there is some culbaility on the employer's part, due to the length of time elapsed and how it was handled. I'm probably just naive with regards whom and how our laws protect though.

I also found this. Looks like they weren't allowed to deduct the amount I "owe" off my last paycheck? (from the employment standards act Ontario)

Deductions, etc.
13 (1) An employer shall not withhold wages payable to an employee, make a deduction from an employee’s wages or cause the employee to return his or her wages to the employer unless authorized to do so under this section. 2000, c. 41, s. 13 (1).

Statute or court order
(2) An employer may withhold or make a deduction from an employee’s wages or cause the employee to return them if a statute of Ontario or Canada or a court order authorizes it. 2000, c. 41, s. 13 (2).

Employee authorization
(3) An employer may withhold or make a deduction from an employee’s wages or cause the employee to return them with the employee’s written authorization. 2000, c. 41, s. 13 (3).

Exception
(4) Subsections (2) and (3) do not apply if the statute, order or written authorization from the employee requires the employer to remit the withheld or deducted wages to a third person and the employer fails to do so. 2000, c. 41, s. 13 (4).

Same
(5) Subsection (3) does not apply if,

(a) the employee’s authorization does not refer to a specific amount or provide a formula from which a specific amount may be calculated;

(b) the employee’s wages were withheld, deducted or required to be returned,

(i) because of faulty work,

(ii) because the employer had a cash shortage, lost property or had property stolen and a person other than the employee had access to the cash or property, or

(iii) under any prescribed conditions; or

(c) the employee’s wages were required to be returned and those wages were the subject of an order under this Act. 2000, c. 41, s. 13 (5).

Priority of claims
14 (1) Despite any other Act, wages shall have priority over and be paid before the claims and rights of all other unsecured creditors of an employer, to the extent of $10,000 per employee. 2000, c. 41, s. 14 (1).

Exception
(2) Subsection (1) does not apply with respect to a distribution made under the Bankruptcy and Insolvency Act (Canada) or other legislation enacted by the Parliament of Canada respecting bankruptcy or insolvency. 2001, c. 9, Sched. I, s. 1 (3)
Just FYI, I mentioned that to you in my second post in this thread... They likely went about it incorrectly. It doesn't mean they can't collect it from you in other ways.

C
Member
Jul 15, 2003
478 posts
73 upvotes
GTA, Ontario
I understand how they can have payroll issues (I see this all the time), however, how did you not know that you were paid incorrectly? Have you only started with them at the start of the year?

You seem pretty bent on keeping the money, so just wait and see.
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Nov 22, 2009
2092 posts
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Dymis wrote:
Dec 5th, 2017 4:00 pm
I understand how they can have payroll issues (I see this all the time), however, how did you not know that you were paid incorrectly? Have you only started with them at the start of the year?

You seem pretty bent on keeping the money, so just wait and see.
I believe he knows from the start, just didn't want to speak out. He doesn't sound that dumb to not know/calculate based on the "gross" amount on his paystubs.
[OP]
Newbie
Dec 3, 2017
22 posts
blitzforce wrote:
Dec 5th, 2017 4:03 pm
I believe he knows from the start, just didn't want to speak out. He doesn't sound that dumb to not know/calculate based on the "gross" amount on his paystubs.
Lol. I definitely didn't know. I don't feel like dealing with this, and would have instantly reported to payroll had I known. The extra money was based on residual vacation pay not being removed from my name in the system, that carried over from when I was under contract and became permanent. The paystub I received is very confusing and after taxes, EI, pension, RRSP, etc. get thrown into the mix, it becomes a pretty complicated calculation.

Also, the amount "extra" on each pay was like $40-50, hence didn't stand out to me. My salary also changed from contract --> permanent, so aside from having someone walk through each line of my paystub and the calculation behind it, no way for me knowing.

I came on here for help, and don't need you accusing me of some conspiracy on my end to "steal" an insignificant amount from my employer.

I'm person of principle, and just like you said, I believe in doing "what's right". Personally, I don't give two #$@% about the money I owe - I'll pay it back if I need to. I just don't want to give in to a shitty company that pulls in >$400mil in revenue a year, then asks for a few hundred backs back from me after I leave, due to an error they made 1 year ago.
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Dec 27, 2009
3562 posts
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nileskramer wrote:
Dec 5th, 2017 1:31 pm
I disagree. Stealing is when a person uses the money while knowing the whole time it is not his. When you get paid by your employer, their responsibility is to offer you a detailed and clear understanding (via paystub or other means), of what each pay contains.
Now that you are aware and are choosing not to pay it back it is stealing. I sure hope you never need to include this company for a reference. What if your new job doesn't work out and then you will be stuck without references - all over a "principle" to prove a point about 3 figures? Not worth it. Pay them back. Why burn bridges?
[OP]
Newbie
Dec 3, 2017
22 posts
Chickinvic wrote:
Dec 6th, 2017 11:04 am
Now that you are aware and are choosing not to pay it back it is stealing. I sure hope you never need to include this company for a reference. What if your new job doesn't work out and then you will be stuck without references - all over a "principle" to prove a point about 3 figures? Not worth it. Pay them back. Why burn bridges?
The company is so large and fragmented, that my team is pretty far removed from payroll/HR.

I'm on pretty good terms with my ex-manager and team, to the point where I'm confident I would always have a good reference if I needed it.

This thread seems to have stalled, I guess I have a different opinion of the ethics here. If i'm legally required to pay it back, I'll do so (begrudgingly), but at the end of the day, I don't think the company is completely absolved from wrongdoing/guilt on their part.
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Mar 23, 2008
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nileskramer wrote:
Dec 6th, 2017 12:24 pm
The company is so large and fragmented, that my team is pretty far removed from payroll/HR.

I'm on pretty good terms with my ex-manager and team, to the point where I'm confident I would always have a good reference if I needed it.

This thread seems to have stalled, I guess I have a different opinion of the ethics here. If i'm legally required to pay it back, I'll do so (begrudgingly), but at the end of the day, I don't think the company is completely absolved from wrongdoing/guilt on their part.
Hmmm...

Legally, I don't think there's any question that you're in the wrong. You got paid more than you should. None of the things you've identified as reasons for not paying it back are valid legal arguments. The cases you cited earlier are significantly different than your scenario, as I pointed out earlier.

The only real question (to me) is whether the amount is significant enough that the company will pursue them in an effort to collect. Which still doesn't mean you're not legally required to pay them back... And since you said that was your criteria for whether you'd pay them back or not...

Let's say you walked out of Costco with a "three figure" item in the bottom of the cart, and the cashier and receipt checker both missed it. You sit down in your car, and upon looking at your receipt, you notice that you didn't get charged for it. Legally, you've just stolen that from them, regardless of whether they had staff and processes in place to make sure you got charged correctly. Practically, however, the likelihood this comes back to bite you in the butt are slim. So... What does your ethics tell you to do? You're telling us your ethics would require you to pay for the item (begrudgingly), even though Costco is a big company and won't miss it, plus you pay them all those membership fees every year.

C
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Mar 23, 2008
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BTW... Sorry if it comes across as "judging". I'm just providing the devil's advocate side of things. At the end of the day, you're the only one that has to live with your decision, and as far as I know, it's no skin off my nose either way.

C
[OP]
Newbie
Dec 3, 2017
22 posts
CNeufeld wrote:
Dec 6th, 2017 2:01 pm
BTW... Sorry if it comes across as "judging". I'm just providing the devil's advocate side of things. At the end of the day, you're the only one that has to live with your decision, and as far as I know, it's no skin off my nose either way.

C
No worries. I totally understand what you're saying (and actually agree with you).

Just to be clear -

LEGALLY = They overpaid me, I owe them.

ETHICALLY = They made a mistake, which now in the course of rectifying, will presumably cause me undue hardship. I understand I have money of their which they do not own, but ethically they have culpability (imo). The point is I spent the money not knowing of the mistake, and this was directly due to them making the mistake and no one knowing about it.

GREY AREA: Where is the line? This is more a rhetorical question than anything else, but I'm just curious at this point. Is a company allowed to recoup overpayments 6 months later? 1 year? etc.? What if I have kids and pass away? Are they allowed to contact them in 20 years and ask them for repayment?

I couldn't find anything (legally) in terms of statute of limitations or restrictions on the parameters. IMO, it seems logical to me that this should exist. Not saying it applies to me per se, but I still think there should be some kind of reasonable application of "what's owed".


Sorry if Im beating a dead horse, just trying to clarify the distinction in my head between legality and ethics. I won't accept the ethical argument of "you got overpaid, so pay them back". Its not that black and white to me and many other factors involved. I'm shocked to think some people on here would just blindly accept that is always the case.
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Nov 22, 2009
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nileskramer wrote:
Dec 6th, 2017 2:14 pm
Sorry if Im beating a dead horse, just trying to clarify the distinction in my head between legality and ethics. I won't accept the ethical argument of "you got overpaid, so pay them back". Its not that black and white to me and many other factors involved. I'm shocked to think some people on here would just blindly accept that is always the case.
Are we talking about this legally or ethically?

Legally, you need to pay back money that isn't yours.

Ethically, well its up to however YOU feel. You created this thread to ask for confirmation that you've done the right thing, but no one is agreeing with you, yet you still try to rationalize your decision.

If "three figures" means that much to you that you'd rather fight this out, then just wait for them to send you a collection letter.
Deal Addict
Nov 22, 2009
2092 posts
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Toronto
nileskramer wrote:
Dec 6th, 2017 2:14 pm
I couldn't find anything (legally) in terms of statute of limitations or restrictions on the parameters. IMO, it seems logical to me that this should exist. Not saying it applies to me per se, but I still think there should be some
Well, you are overpaid by accident. I don't think it's rocket science to require a specific rule of law to state that because you were overpaid, you need to give them their money back.

I also don't think a few hundred dollars is going to cause you "undue hardship". I assume your "three figures" is close to a thousand dollars, or else you'd just say "it's only a $100 bucks".
[OP]
Newbie
Dec 3, 2017
22 posts
blitzforce wrote:
Dec 6th, 2017 2:45 pm
Well, you are overpaid by accident. I don't think it's rocket science to require a specific rule of law to state that because you were overpaid, you need to give them their money back.

I also don't think a few hundred dollars is going to cause you "undue hardship". I assume your "three figures" is close to a thousand dollars, or else you'd just say "it's only a $100 bucks".
It's not causing me undue hardship. But, in theory it could, if they were asking for a lot more.

I think you're not understanding the fact that I'm not trying to rationalize the legal argument, I already have that answer, more or less.

I just find it interesting that your own personal ethics on this are so black and white. Maybe I don't see it the way everyone else does, but I still don't think it would be "right" from a moral standpoint, given everything known about this specific situation, for them to request it back.

The company I work for now has under-billed clients in the past. Instead of asking for the money back (which they are legally entitled to), they didn't, as it was their own mistake.

Anyways, I'm going to call this one. Thanks to everyone for providing the legal answer I was looking for.
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Mar 23, 2008
4919 posts
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So just to pick some nits here...

It seems that you're acknowledging that LEGALLY, you're obligated to pay them back. Ethically, you feel there's a grey area? Because you've mentioned a few times that if you were legally required to pay them back, you would.

Second, as mentioned before, there is limited support for your "grey area" arguments in the cases you cited, mainly due to the significance of them. 4 years of overpayments vs. 10 months in your case is the closest match. But even with that, if you read the actual case decision (http://pslreb-crtefp.gc.ca/decisions/fu ... 1-57_e.asp), you'll see that the amount and impact of the error were also significant. The guy was basically screwed out of his retirement after working a low paying job for 35 years, and as a result of having to pay back $300/month (for the overpayment), he had to take out a line of credit to pay for the foster home he and his wife ran. And in fact, there was another employee who was caught in the same overpayment issue as the cited case who DID have to pay the money back, because the impact to him were not as significant.

If you go to the CanLII website and search for "employer overpayment estoppel", you'll find numerous links to review. In particular, the Indian and Northern Affairs department got caught numerous times with their pants down. And in the cases that I read, the application of "estoppel" was shot down more often than not.

Here's some notes of what needs to be proven from one case (https://www.canlii.org/en/ca/pssrb/doc/ ... ltIndex=10):
i. There must be an overpayment of salary or other compensation. This overpayment must have the effect of misleading the employee into a bona fide belief in entitlement to a mistaken salary level.

ii. The employee must rely on the salary to his detriment, such that he experiences what can be characterized as a material change in circumstances.

iii. Mere spending of the money is not sufficient to show a detriment. There must be a commitment made or a project undertaken in reliance on the mistaken salary, which is not reversible due to the contractual nature of the commitment or the passage of time.

iv. Two further considerations arise from obiter dicta in several of the cases. There appears to be some duty on the employee to attempt to mitigate the consequences of the employer’s error, but this does not appear to extend so far as to require the employee to accept a reduced standard of living (see Molbak). Similarly, there appears to be a duty on the employer to discover and correct the error as soon as possible.
You would need to prove that you made a material change in your circumstances due to the error. The dude with the foster home and at the end of his career after 35 years of a low paying job? He could prove his case, and got his 10k back. Can you prove the same level of material change?

So basically, to answer your question of how far back can the company go in trying to recoup their money? As far back as they need to. The case you cited wasn't necessarily impacted by the 4 years of overpayments, but by the significance of repaying the money to the employee affected. Another employee who was overpaid just as long still had to repay the money, because it didn't cause them the same degree of hardship to repay.

C
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Nov 22, 2009
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nileskramer wrote:
Dec 6th, 2017 2:52 pm
The company I work for now has under-billed clients in the past. Instead of asking for the money back (which they are legally entitled to), they didn't, as it was their own mistake.
I assume they intentionally under bill in order to make sure they can keep doing business with them. I'm not sure how you can use this to rationalize that instead of going for the top-dog, they want to collect from you instead.

"Why is CRA auditing me and asking me to pay back their overpayment mistake? They've already issued the NOA, and I've budgeted my vacation based on my tax refund. Why are they going after spare-change when there are millionaires/billionaires evading taxes?", same logic.

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