can boss deduct the cost of a mistake from my paycheck?

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A reader writes:

Last year, I overcharged a customer by approximately $1500. No one caught it and the customer paid the bill. In reviewing what the customer wanted to purchase for this year, they saw the mistake and requested a $1500 credit.

My boss has decided that I must cover this loss for the company and is taking it out of my paycheck. I found out that this is illegal but I am afraid that if I confront him he will fire me, as he has all the power and I have none. Of course, if he does fire me, I could go after him legally but I am not big on doing something like that. So it comes down to this: Do I stand up for my self and risk getting fired (knowing I stood up for myself and did the right thing, and also knowing in this economy I will have to find a job that may be non existent), or do I eat the $1500 and get on with my life with my tail between my legs (and keep my job)?

Ugh. What a horrible situation. People are human and from time to time they’ll make mistakes. A good manager will see something like this as part of the cost of doing business. Of course, if an employee makes a lot of these mistakes, you have a pattern and that needs to be addressed, through coaching, warnings, termination, whatever is appropriate. But one mistake? No, not unless it’s far bigger than this one.

Regarding the legality: I’m not a lawyer and laws vary from state to state, but in general, most state laws prohibit an employer from deducting this sort of thing unless it was the result of willful, deliberate misconduct.

Here’s how I’d handle it, with the caveat that I know nothing about your boss or your relationship with him. I’d sit down with him and say something like: “I feel really awkward about this, but I’d like to talk to you about this $1500. I’m mortified that I made the mistake, and I’ve been reviewing the procedures I use so that I can put safeguards in place to ensure it never happens again. However, we both know that mistakes happen in the normal course of business. In fact, sometimes people make enormous mistakes that we can’t even put a price tag on, such as when a strategic decision goes wrong. Generally people aren’t asked to pay the company back for the costs of those mistakes, because they’re part of the cost of doing business. I know that this mistake reflects on me, and I’m holding myself accountable to making sure it doesn’t happen again, but asking me to pay the money back doesn’t seem right to me. Does the company generally ask people to reimburse the cost of mistakes they make?”

Hopefully, your boss just hasn’t thought this through clearly and this will inspire him to. On the other hand, if he’s a jerk and not very bright, this may get you nowhere. I’d try it though.

{ 15 comments… read them below }

  1. Dataceptionist

    Whoa. Personally, I couldn’t work for a company that tried to do that to me. As AaM said, it wasn’t wilful, and that can’t be legal right? Have you tried simply Googling this sort of thing?

  2. Henry

    The boss is so in the wrong here. I would do as AaM says, and then try to find a new gig as soon as possible.

    Personally, I would do everything I can do to NOT pay that money, especially seeing as the company wasn’t financially hurt: as I understand it, the mistake meant the company had an extra $1500 on last year’s income sheet, but it’s net position would be the same at this point if the mistake hadn’t happened.

  3. Evil HR Lady

    I agree with Henry. I don’t see any “loss” to the company. It nets out to zero.

    I think the boss is a being a jerk.

  4. Anonymous

    I am amazed at how many bad bosses there are out there. But I must be missing something… the money went into the company, not your own pocket, right? So basically, after getting an extra $1500, your boss wants to get an extra $1500? Doesn’t make sense.

    Also, while mistakes are truly regrettable, and you should take responsibility, consider that no one in finance or accounting caught this mistake either. Accounts should be reconciled regularly; they should have noticed that the company had an extra $1500 that didn’t belong to them and they should have been looking for the cause. In a nutshell, this situation is not completely your fault.

    And I agree with other posters – start looking for a new job. Either your boss is a total jerk or he has no clue how to run a business. The writing is on the wall – get out before the company disappears with your last paycheck.

  5. HR Godess

    Unless you profited from the mistake, I can’t see how the company can require you to pay it back (nor can they legally require it). I’d address with your boss (as politely as you could) and if that doesn’t work, go to HR. Also, does anyone cross check work? It seems like accounting or someone should have noticed the error when you received the money. Seems like something that should have been caught by more than just you.

  6. Anonymous

    I am guessing that this is a small company, otherwise the mistake would have been caught. It appears that you’ve already tried to discuss this with your boss, who has told you more or less, the decision has been made.

    Go to whomever cuts the paychecks and explain what has happened. In the end, they’re the ones responsible for the checks being accurate and they can be held accountable. If you’re not comfortable discussing this with your boss, they can handle it with a simple, “we can’t legally do that.”

  7. Neha

    This is complete insanity especially considering the affected customer REMAINED a loyal customer and simply asked for a reasonable arrangement correcting the mistake.

  8. Just another HR lady...

    Perhaps I’m not reading this correctly, but it doesn’t seem that the company is out any money? A customer was overcharged, they were then given a credit (they didn’t even ask for cash back!) for the amount they were overcharged. Where is the loss?

    In any case, AAM gave some good advice. Apologize for your mistake and show how you have taken steps to make sure that it doesn’t happen again, but make sure that your boss is aware that you do not agree with deducting any money from your pay for this error. If you allow it to happen this time, it’s going to continue.

  9. Bohdan

    Time value of money. The company gained because it had the $1500 to spend as it saw fit for additional time.

    If the company had ended up losing the customer, that’d be a different (and potentially terminable depending on the customer) offense, in my opinion.

    I would approach your boss and say something like, “We both agree that people should be held accountable for their mistakes, right?” He answers yes. “If I lost the company money I should definitely be punished, right?” He says yes again, though he might try to be nicer about it. “I just don’t understand how, if the customer paid the bill for $1500 last year we actually lost money this year. Clearly it was my mistake, but can you help me understand how this cost the company extra money?”

    Say it sincerely too, no snide comments or condescending attitude. He may actually have a good response. If he really feels you cost the company $1500 he can’t legally charge you for it, owners are liable for the risk of a business, that’s why they get to keep profits. He can, however, write you up, fire you, demote you, give you a pay cut, etc.

    I wouldn’t necessarily quit unless he does this kind of thing a lot. Likely it was just a big number, to him, that stunned him and he reacted poorly. You can help him save face by offering alternative punishments (that are more reasonable) and then acting like it was all his idea in public.

  10. Anonymous

    Regardless if it is legal or not to charge the employee the cost of their mistake, this particular mistake did not cost anything to the customer.

    The company got an extra $1500 last year, and is refunding it back to the customer this year. It’s not like the overcharge ended up in the letter author’s pocket.

  11. brett

    obviously you should not pay that absurb amount of money for a mistake, as the mistake did not actually cost the company any money- they just wont end up getting $1500 for free. You should also tell your boss to go F himself and screw his wife.

  12. Experienced

    Unless you some how profited from this error and took home that money i dont see an issue. If you did then give back the money otherwise It surprises me that no one noted that it was a clerical error and the company erroneously profited 1500.00 . This happens and a simple credit should be furnished to the customer but not sent provided via check back to customer unless you – the company can afford to. Its not a loss , it was an erroneous gain.

  13. Roy

    I know it’s an old post but i was reading up on similar stuff and found this.

    Basically he has no grounds to stand on, the mistake was in his favour and paying it back incurs no actual loss to him beause he should not have had the money in the first place, in fact if it was almost a year later that the customer noticed then your boss has actually benefited from the mistake to the sum of interest gained on the money. I would confront him and tell him he has to pay you or you will take him to court. If he fires you for that then you have firm grounds to sue.

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