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!