Chilean Worker Disappears After Receiving 330 Times Salary

Mohit Oberoi, CFA - Author
By

Jul. 5 2022, Published 8:24 a.m. ET

While nobody would mind a few extra bucks in monthly salary credit, a Chilean worker was taken by surprise after he received 330 times his monthly salary. While he reportedly raised the issue with his manager, who flagged it to HR, the worker subsequently disappeared. What are the laws governing such issues in the U.S. if you get overpaid by your employer? It's important to know the laws regarding overpayment in order to handle your personal finances correctly.

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While the Chilean worker hasn’t been named, he worked as a dispatch assistant with CIAL (Consorcio Industrial de Alimentos), a Chilean frozen foods company. His monthly salary was 500,000 Chilean pesos (around $540). However, he accidentally got paid 165,398,851 Chilean pesos for May, which at current exchange rates comes to around $180,000.

Chilean worker disappears after receiving over 300 times his salary.

When the Chilean worker informed his company about the accounting error, he was asked to return the excess amount, which he agreed to do. However, he subsequently sent his resignation to CIAL through his attorney after ignoring calls from them for three days. The worker has disappeared since then and nothing is known about his whereabouts.

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To put the money in perspective, the minimum monthly basic wage in Chile is around $450 after it was recently raised. Also, the amount that the Chilean worker received is even higher than the annual salary of the country’s president Gabriel Boric.

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While the worker has disappeared and many people on social media have said that they would also have done the same if their company paid that humongous amount, the law has a different take on the accounting error.

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If your job overpays, you have to pay it back.

The law mandates that you need to repay any payment that was made wrongly to you. Keeping the money would be treated as a misappropriation of funds. Incidentally, CIAL has also accused the absconding worker of misappropriation of funds but no arrests have been made yet.

In the U.S., the laws governing the misappropriation of funds vary by state. Also, it would depend on whether it's treated as a misdemeanor or a felony. Companies can recover the due payments from the employee's future earnings, a process known as garnishing wages.

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The Fair Labor Standards Act allows companies to recover the overpayment.

The Fair Labor Standards Act as well as state laws allow companies to recover the overpayment from employees. However, the laws on the process of recovery vary by state. For example, in Washington, the employer would first need to notify the employee and also share the documentation as well as other terms of recovery.

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In California, the employee needs to provide consent for the direct deposit reversal. In Indiana, companies can deduct the overpayment from the paycheck after providing a minimum of two weeks of notice.

Your former employer can also seek recovery.

Even a former employer has the right to seek the recovery of any excess overpayment. However, overpayments can only be collected over six years It might be difficult to trace former employees since they could change their contact details.

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