Direct Deposit Reversals

[demon_dog]

State of Ohio

My employer erroneously paid employees a day early. They are going out of business and had intended to wait until additional revenue came in before paying employees (this is not a liquidity issue, but instead a potentially shady business move). Our employee handbooks, etc state that payroll is to be paid on the last business day of the month. Seeing as the amounts are legally owed to us as of end of business tomorrow, does my company have the right to reverse my direct deposit?

 

[Proserpina]

State of Ohio

My employer erroneously paid employees a day early. They are going out of business and had intended to wait until additional revenue came in before paying employees (this is not a liquidity issue, but instead a potentially shady business move). Our employee handbooks, etc state that payroll is to be paid on the last business day of the month. Seeing as the amounts are legally owed to us as of end of business tomorrow, does my company have the right to reverse my direct deposit?

Looks like you answered your own question there.

 

[cbg]

However, it would probably cost them more in fees than it would just to let it go, so I wouldn't worry too much about it.

 

[demon_dog]

They typically pay out payroll a business day early when near a holiday (in this case New Year's) to ensure the banking holiday does not disrupt employees' paychecks. And they have never asked for it back. In this instance however, I suspect they are attempting to get it back due to other issues with the business winding down. We found out today that they actually intended to delay our paychecks by about a week or so. So we are all in fear that they will retrieve our direct deposits and then fail to pay us for several more days (if at all).

Based on the laws for unauthorized EFTs that I've researched, they have the right to claim the money back within 5 business days if:
a) the money was deposited into the incorrect account
b) the money deposited was the incorrect amount
c) the deposit was a duplication

Seeing as none of the above are true, it would make sense that they would not be able to retrieve the money back, but it is still a very real threat, and I would like to know more about the legal rights that I have to keep this paycheck

 

[Proserpina]

They typically pay out payroll a business day early when near a holiday (in this case New Year's) to ensure the banking holiday does not disrupt employees' paychecks. And they have never asked for it back. In this instance however, I suspect they are attempting to get it back due to other issues with the business winding down. We found out today that they actually intended to delay our paychecks by about a week or so. So we are all in fear that they will retrieve our direct deposits and then fail to pay us for several more days (if at all).

Based on the laws for unauthorized EFTs that I've researched, they have the right to claim the money back within 5 business days if:
a) the money was deposited into the incorrect account
b) the money deposited was the incorrect amount
c) the deposit was a duplication

Seeing as none of the above are true, it would make sense that they would not be able to retrieve the money back, but it is still a very real threat, and I would like to know more about the legal rights that I have to keep this paycheck

Before we go further, how does your bank deal with this? You have a copy of the terms, yes?

 

[swalsh411]

Have you notified your bank of the situation?