I am a small-business employer and accidentally overpaid an employee on her last check $360 (about 40% more then she should have received). Payday was Friday. On Monday I found the error. The check has not cleared my bank yet so I put a stop-payment on it. I called her and she told me she cashed the check at Wal-Mart on Friday night and she already has the money. I told her the money is not hers and she needs to pay the money back. She laughed and said she already spent it but she would "try to repay if she ever had extra money". The employee was a manager for us but did not show up for her last shift so we are not on good terms. I am in Texas.

My questions are:

• What is her obligation to repay the amount?
• Can you point me to the supporting law?
• If she refuses to repay the amount should this be handled in Small Claims Court or through another agency?
• Who will Wal-Mart go after when the check is stopped by my bank; me or the employee that cashed it?

Thanks for your help!

Quote:

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Originally Posted by employer_help

I am a small-business employer and accidentally overpaid an employee on her last check $360 (about 40% more then she should have received). Payday was Friday. On Monday I found the error. The check has not cleared my bank yet so I put a stop-payment on it. I called her and she told me she cashed the check at Wal-Mart on Friday night and she already has the money. I told her the money is not hers and she needs to pay the money back. She laughed and said she already spent it but she would "try to repay if she ever had extra money". The employee was a manager for us but did not show up for her last shift so we are not on good terms. I am in Texas.

My questions are:

• What is her obligation to repay the amount?
• Can you point me to the supporting law?
• If she refuses to repay the amount should this be handled in Small Claims Court or through another agency?
• Who will Wal-Mart go after when the check is stopped by my bank; me or the employee that cashed it?

Thanks for your help!

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You are, in a sense, screwed. It was your error in over paying her and she has no legal obligation to pay you back the money you paid her. You can try to find a loophole or some legal way around it by contacting a lawyer but I don't think your going to get anywhere. If your wondering how I know this my brother is a lawyer (just wanted to throw that in there so you don't think I'm some guy talking out of his rear end).
In terms of who Walmart will go after I would be lying if I told you I knew the answer to that. But I'm assuming they will end up going after you.

Walmart would go after the person who cashed the check.
Is the employee still working for your company? If they were still working for you and you stopped payment on the check that was wrong of you to do this since it was your error. You should have taken the overpayment out of the employees next check.
I worked for several companies who accidentally overpaid employees and they would have not stopped payment on their checks. They just notified the employees that their paychecks were in error by X amount of dollars and that the money would be taken out in their next paycheck. You must pay an employee their wages. Why would you cancel or stop payment on a paycheck?

Notify her in writing of the mistake and deduct the difference from her final paycheck

You weren't wrong in stopping the check, but deducting it from the next paycheck would have been the better course of action. Walmart will only go after the employee. They are the one who presented the check.

One question, did you immediately issue a corrected check? If you didn't that could get you in trouble. Even if the employee didn't come pick it up you should have immediately reissued it.