Would you return part of a severance payment if your employer asked?

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In California, a group of recently laid off Microsoft employees received a letter in the mail from their former employer, stating that due to an “inadvertent administrative error” there was an overpayment made in the employee’s severance check. Microsoft initially requested that the ex-employee’s return the overpayment amount to the company (they’ve since changed their mind). While it’s not clear if employees are bound by the law to return the overpayment, Microsoft does include some information about tax consequences relating to overpayments in the letter. You can see a partially scanned copy of the Microsoft letter on TechCrunch. (They are also reporting now that Microsoft has backed off their demand for return of the overpayment, and will allow employees who were overcompensated to keep the amount. Only about 25 were overpaid.)

So if you were laid off and received a severance package, and your former employer turned around claiming an overpayment error, would you willingly give back the overpayment amount? Do you think companies should absorb accounting errors such as these in order to save their public reputation, like Microsoft did?

10 comments Add your comment

Honest Guy

February 24th, 2009
11:50 am

If the severance package specifically outlined the dollar amount to be paid and the payment received was actually more, I think the company has the right to request that the former employee return the amount in question. That being said, I think it would be a moral obligation for the former employee to return the money…not a legal obligation.

Loving Daughter

February 24th, 2009
12:50 pm

I wonder how much $$$ we’re talking about per laid-off employee?

Jim Sanders

February 24th, 2009
12:54 pm

…dude! we’re talkin’ about microsoft. the kind of administrative error they’re talking about should have been PREVENTED by the wonderful technology they’re always trying to get other companies to buy. if they made a mistake, then they should just bite the bullet, swallow hard and wait for it to come out on the other end. shame on them for making themselves look like BOZO’S…!

Steve

February 24th, 2009
1:17 pm

I’ve not seen a figure as to how much these employees were overpaid. Unless it’s more than $1000 per employee, I’m surprised Microsoft would come back to these individuals at all. From the fact MS is now recanting (allowing people to keep the money), they must realize how they look to the general public. Asking these laid off employees for some portion of the money back is about as insensitive as you can get. Calling the mistake an ‘inadvertent administrative error’ is fine, but it was MS’s mistake. Live with it as a ‘cost of doing business’.
As for the MS person who authorized ‘requesting the money back’, move his desk to the basement and take away his red stapler.
To answer the question raised, yes I would give it back (provided I had the means to do so).

Katie

February 24th, 2009
2:02 pm

I was recently laid off and in my letter was told how much I’m to receive in two lump sum payments (minus taxes and junk fees). If I were to receive more, of course I’m keeping it! I was thrown under the bus and the government gave the company BILLIONS. A measley overpayment to me would not affect them in the least.

Karla

February 24th, 2009
2:16 pm

No, I would not return the money.
Yes, I think Microsoft absorb the error.

MARGARET

February 24th, 2009
3:13 pm

HONESTY IS ALWAYS THE BEST POLICY.

Jeff

February 24th, 2009
3:19 pm

To those of you that were laid off recently and said they would keep the money then that is a pretty good example of why you were laid off in the first place.

Greg B

November 11th, 2009
5:02 pm

GE is trying to do the same thing to me as they laid me off last March. $2300 overpayment. When I contacted them about the extra money they assured me it was a severance benefit. They then recanted and said I was overpaid due to a system error. Am I legally required to return this even though they assured me it was mine?

Aimee

August 31st, 2010
6:28 pm

This very same thing happened to me. I was given a document detailing my severance, however my last check included an additional bonus. I called the company to let them know about the overpayment because my check was unusually high. They asked for the money back, but I have not sent it to them yet. Honestly, I have spent some of the money. I did not know how much was in error and at the time and I did not have the luxury of waiting the two weeks for them to get back to me to let them know. Yes, I am morally obligated to return the money; not sure if legally obligated. I have to first put back the money that I spent which is difficult with $330/wk in unemployment payments for a family of five. Easy to say what you would do until you are placed in this situation with little to no financial means.