An Ohio Honda factory and an Oregon health system recently discovered that they inadvertently had overpaid their employees. Whereas Honda chose to pursue recoupment of the bonuses that it overpaid to an unknown number of its nearly 4,000 employees, St. Charles Health System of Bend, OR, ultimately dropped its demand for reimbursement of the overpaid funds after objections from workers and unions.
The Honda Company Bonus Overpayment
After sending out bonus checks to workers at its Marysville, OH, plant, Honda notified workers that they had received an overpayment of their bonuses. They issued a company memo detailing the options for employees to repay the overpayment. These options include making a lump sum payment, paying the sum back via an installment plan spread over multiple paychecks, or agreeing to a deduction from any future bonuses.
According to one account, workers had nine days to respond and return at least a portion of the overpaid bonuses that they had received. In some cases, this amounted to hundreds of dollars. Failing to respond to the notification of overpayment or to choose a repayment option resulted in automatic paycheck deductions of the overpaid amount.
Under the Fair Labor Standards Act (FLSA), employers can legally recoup funds that they overpay employees in wages, salaries, or bonuses. If necessary, they can sue employees who fail to repay any overpayment. Employers face no penalty for overpaying employees.
The St. Charles Health System Overpayment
Last year, the hack on UKG, a major HR technology provider, resulted in St. Charles Health System (“St. Charles”) manually overseeing payroll. The incident resulted in approximately $2 million in overpayments to St. Charles employees. After employees and unions objected, expressing confusion and frustration at the information and tools the employer provided to verify their overpayments, St. Charles decided to refrain from seeking repayment of the funds. The healthcare system reasoned that it did not have the resources to process the hundreds of data verification requests it had received from employees. Instead of pursuing recoupment, the employer encouraged its employees to donate to the St. Charles Cares Caregiver Assistance Fund of the St. Charles Foundation.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
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