“My former employer took money out of my bank account. Is that legal?”

Question: I was an exempt, salaried employee. When I resigned my job, I gave notice of one month prior to leaving, in accordance with policy. It’s been two weeks since I left, and I was just advised that HR has begun an “investigation” of me. As a result, they have withheld my last paycheck, as well as my accrued-but-unpaid vacation pay. Most disturbing is that they actually went into my bank account and took back my last paycheck. Is that legal?

Luanne, from Tacoma, WA

Answer: I am not experienced in banking law; nor am I qualified to discuss the laws of the State of Washington. However, I can share with you my experience in these matters, and the lessons I have drawn from those experiences.

I have many times seen what has happened to you happen to other employees, in several states. That is, many times I have seen employers who pay their employees by means of “direct deposit” into their employees’ bank accounts, later turn around and withdraw from those employees’ bank accounts without authorization. I have seen these later withdrawals take place weeks, and even months, after the original payroll deposit was made. I have seen this take place with regard to (a) severance monies, (b) bonus monies, and (c) payroll monies. Each time, the employer claimed that the withdrawn monies had been “deposited in error.”

Is it legal? I believe it is probably legal for an employer to withdraw monies from an employee’s bank account that were truly deposited in error, such as two paychecks in one pay period, or two bonuses when only one bonus was earned.

However, I believe it is probably illegal for an employer to engage in “self-help” measures, by withdrawing monies that were deposited correctly, but now the employer believes it would like to take those monies back to reimburse itself for other items it claims it is owed. For example, it would be illegal for you to break into your neighbor’s house, and take money from his wallet just because he failed to return your lawn mower. That is what lawyers and courts call “self-help,” and it is frowned upon. Just think about it: you may be wrong that your neighbor didn’t return your lawn mower; maybe he put it in your garage. In the same way, if an employer believes you stole $1,000 from petty cash, it should not take $1,000 from your bank account; it should either call the police, or sue you; after an investigation, or a trial, it may just turn out that your employer may have been wrong.

It is for this reason that I urge all of my clients to take this precaution: if your employer direct-deposits monies into your bank account, make sure that bank account is always nearly empty; immediately remove all of the monies that go into that account into an account at an entirely different bank. Always do this, even in “happy” and “peaceful” times, for they could become “unhappy” and “adversarial” in “the blink of an eye.”

I don’t know all of the facts of the “investigation” you refer to, but if you believe your employer took monies that were not truly “deposited in error,” I strongly suggest you contact the Washington State Department of Labor and Industry. Their website is www.LNI.wa.gov. On their website you will find the forms to file a complaint. You might want to call them instead; their number is 1-800-547-8367. Even though you are an exempt, salaried employee, you should have them on your side.

Don’t be intimidated. Don’t be a victim. Stand up for what is right. You’ll be glad you did.

Best, Al Sklover

If you agreed to repay your former employer (a) tuition reimbursement, (b) relocation expenses, (c) a sign-on bonus, or even (d) a short-term loan, you may be able to have that obligation waived and forgiven. To obtain a copy of our Model Memo entitled “Model Letter for Repayment Obligation Forgiveness – with 18 Great Reasons,” just [click here.] “What to Say, and How to Say It.™” – Delivered by Email – Instantly!

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