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Blog: The Business of Management
 

May 2nd, 2008

What Do You Do When You Accidentally Overpay Workers?

I worked in San Francisco during the wild and crazy dot-com boom of the late 1990s, and as crazy as things were then, the strangest thing that happened was having another employee’s paychecks deposited in my bank account—for three months in a row.

While this may sound like a good deal, someone always discovers such discrepancies—and then you have to pay the money back. The funny thing about my situation was that I didn’t figure out I had a lot more money in my bank account (thanks to direct deposit and working insanely long dot-com hours), but neither did the CEO’s administrative assistant—the one who’d had her paychecks diverted to my account. How she paid her bills for the three months I was getting her salary was a mystery I never solved, but the end result is that I had to write a check for more than $5,000 to straighten it all out.

I thought about this when reading this story in the Atlanta Journal-Constitution about a payroll error in January that gave 18 Atlanta city workers some $375,000 in mileage reimbursement. According to the newspaper, the workers “mistakenly got paid $375,000—about $371,000 more than was legitimate—because someone inadvertently coded the mileage reimbursement rate at $40 per mile instead of 40 cents.”

What should workers do when they think they have been overpaid? Morally and ethically, they should fess up and tell someone about it, but as surveys have shown, not all workers are particularly moral or ethical.

 When I was “overpaid,” I didn’t know about it until someone told me. I was spending so much time at work that I just wasn’t focused on how much was in my checking account. When someone did finally tell me, I was embarrassed that I hadn’t figured it out sooner. And I quickly wrote a check to make it right.

That’s not the case in Atlanta, where “auditors found three months later that seven still had not repaid. Today, two still owe the city a total of nearly $40,000. Officials said some employees have been reprimanded but no one has been fired.”

“I was astonished,” city auditor Leslie Ward told the Journal-Constitution. “I don’t know how else to describe it. This seems like it would have to be some violation of employee conduct, ethics or law.”

It may be some or all of the above, but it also may simply reflect our working world in the year 2008, and the lack of any real bond between workers and employers. Yes, this probably could have happened in just about any day and age, but the more workers are made to feel like disposable parts, the less they may feel morally bound to do the right thing.


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Comments

At our big retail company this was unfortunatley common. We let people know asap. Our best approach was to give them a regular check next time, ask for repayment by date X and, if not, then start deducting over the same period that we had overpaid. You have to check your local jurisdiction’s rules on deductions to see if this is legal, but it’s generally reasonably understandable to employees and as a standard practice gives them a choice (always good) and doesn’t make them feel singled out as bad. Other approaches resulted in far more disputes. By the way - our mistake… no interest charged… as I’ve seen some companies attempt to do, which truly escalates the anger.


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