Q: About a month ago I gave my assistant a raise. When my bookkeeper entered the amount she transposed two numbers so instead of entering $15.70 she entered $17.50. It took me about a month before I discovered and corrected the error. She was over paid by $1.60 per hour for 180 hours – essentially a total of $280.00. I understand that these errors occur, I am not angry at my bookkeeper but I am upset about is the assistant’s failure to let me know of the error. I feel that her failure to notify me of this error was dishonest and that I can no longer trust her which leads to my two questions; how can I legally recover this money and how do I deal with an assistant I do not trust?
A: Let me begin with the easy question. You will be able to recover the money as long as you comply with Michigan law, which states that you may deduct overpayments of wages if all of the following conditions are met.
- The deduction must be taken within six (6) months of the overpayment.
- The overpayment was due to an error that was clerical, mathematical, typographical, or misprint and made by the employer, employee or representative of either the employee or employer.
- The employer provides a written explanation to the employee and provides it at least one pay period prior to taking any deduction.
- The deduction cannot be greater than 15% of the gross wages for the pay period.
- The deduction is taken after all other deductions are taken and does not reduce the wages to less than federal of Michigan minimum wage.
Calculate the total amount of the overpayment, $280.00 and adviser her that due to the overpayment she will have deduction tanked every pay until the money is paid back. Let her know exactly how many pays will be impacted. It is best to talk to her first an let her know how you will be recovering the money and how, put it in writing according to the terms required by state law, then have her sign the document and place it in her personnel file.
This money should deducted from her gross wages. This will reduce her gross wages and will allow you to recover all money paid including money that went to pay taxes.
The first question poses more of a challenge. I cannot blame you for your feelings toward your assistant, but before you take adverse action against this employee, let’s think a bit. While you can legally get the money back, the cost of having to hire and train a new assistant will be much higher. If in all other ways she has been a good employee, the emphasis should be placed on rebuilding trust and repairing your relationship.
This begins through conversation. Let her tell her side of the story. She may claim that she did not realize that there was an overpayment, she may become defensive or she may be apologetic. You do not want to get into an argument, just listen to her side – give her a chance to say her side. You will be left to judge if you believe her.
The goal here is to let her know that her decision not to notify you of the error was a disappointment. This could and should be an object lesson. Honesty from the beginning would have significantly benefited her. Here decision to say nothing has impacted her reputation and credibility.
Be prepared for emotion which will likely be tears, but may be anger, or denial. While you need to allow for the emotion, do not let it be used to gain the upper hand in the conversation, stay the course and use this time to discuss how to repair the relationship and regain your trust. The ball is in her court.