Law's Remarkable Failure to Protect Mistakenly Overpaid Employees

54 Pages Posted: 19 Oct 2014

See all articles by Jim Hawkins

Jim Hawkins

University of Houston Law Center

Date Written: October 17, 2014

Abstract

Employers frequently make mistakes and overpay their employees. For instance, the federal government alone, which makes up only around 2% of the U.S. workforce, will likely overpay its employees by $2 billion this year. After discovering the error, employers often recoup the mistaken overpayments without the supervision of the courts by simply exercising a self-help remedy — setting-off the debt against the employees’ paychecks. The law of restitution enables this recovery because overpaying on a contract is a prototypical example of unjust enrichment. For some employees, the entire transaction is trivial, but for many others, losing significant portions of their wages and suffering from aggressive collection techniques drive the employees and their families into financial distress.

Remarkably, current law does virtually nothing to protect employees who are indebted to their employers, and scholarship on restitution, creditor-debtor law, and employment law has not recognized this near absolute absence of protection. This Article uncovers law’s failure to protect mistakenly overpaid employees and suggests judicial and legislative action to protect this vulnerable group.

Keywords: restitution, employment law, debt collection, bankruptcy, unjust enrichment, self-help remedies

Suggested Citation

Hawkins, Jim, Law's Remarkable Failure to Protect Mistakenly Overpaid Employees (October 17, 2014). Minnesota Law Review, Vol. 99, 2014, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2511449

Jim Hawkins (Contact Author)

University of Houston Law Center ( email )

4604 Calhoun Road
Houston, TX 77204-6060
United States

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