For two years, Batteries Plus was erroneously generous with one of its employees' paychecks. Clinton Mohr had been receiving mileage reimbursements on top of his base salary and commissions. Then the company said the mileage reimbursements were a mistake and asked him to return the $11,000 worth of overpayments via regular deductions from his paycheck.
When Mohr refused, the company fired him and filed suit to recover the money. He countersued for wrongful discharge.
Mohr won and the company was out more than just the original $11,000. The court awarded him $60,000 in damages, plus double his legal costs and interest. Reason: The company violated Wisconsin's public policy against forcing an employee to bear the burden of a work-related loss. Wisconsin permits pay deductions for work-related losses only in cases of employee carelessness, negligence, or willful misconduct, and only after the employee has had an opportunity to answer such charges. (Batteries Plus v. Mohr, No. 99-1319, Wis. Ct. Ap., 2000)
Advice: Don't be too discouraged by this ruling. Most states allow employers to recover excessive compensation if the employee has been overpaid due to a mistake of fact, such as a mistake in pay grade or a calculation error. It doesn't matter whether the mistake was caused by the employer alone or was a mutual mistake. In this case, it was not that the employer didn't have the right to recover money but the manner in which it attempted to do that. State law may regulate the extent to which you may deduct from, requiring written consent from the employee or a court order. Check your state law before trying to recoup overpayments.
When firing, also be aware of potential liability for wrongful discharge and discrimination.
- Beware bias claims when accommodations differ
- In all promotion notices, include specifics about minimum job requirements
- Assess your software vendors' viability as economy lags
- Handle firing with care if employee has complained about alleged corporate wrongdoing
- FLSA lawsuit cocktail: Hourly staff mixing work, lunch