The Dallas Fire Department accidentally paid a former firefighter $127,000 after he quit. Now it wants that money back

The city of Dallas is suing a former firefighter, saying in a lawsuit that Ivan Gonzales kept receiving paychecks for 20 months after he left the city’s fire department and even after moving out of the state. In total, the city alleges, the payments came to $127,441.

Gonzales resigned from Dallas Fire-Rescue in June 2023 and submitted his termination paperwork to human resources. The city alleges the paperwork was not processed until last April. During that gap, Gonzales’ supervisor continued to approve biweekly paychecks for a roster of over 250 employees, assuming they had worked the required 40 hours a week, according to The Dallas Morning News (1).

“There were many other Ivans and Gonzales’ on Captain (Corey) Womack’s roster, which prevented him from realizing Mr. Gonzales had not been removed from the roster,” the lawsuit states.

City officials declined to tell the Morning News whether this was the only case of former employees being paid in error.

City officials allege Gonzales updated his banking information in the city’s payroll system after he left and moved to Florida, allowing the payments to continue being deposited into his account. In addition to the back salary, the city is asking the court to add interest starting from the date the lawsuit was filed.

“This money was not intended to be a gift,” city attorneys wrote in the lawsuit. “[These] payments belong to the city in equity and good conscience.”

Generally, employees who receive money after leaving a job are required to pay it back. But since this case appears to involve a clerical error by the fire department, the situation may not be so cut and dry.

In fact, the broader issue of repaying an employer after leaving is not always clear. Some workers who receive signing bonuses, tuition reimbursement or various types of training must repay those benefits if they leave within a set period.

Those are known as “stay or pay” agreements, meant to ensure the employers get a fair return on their investment.

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In some instances, “stay or pay” agreements are criticized as tools to limit employee mobility. Critics call them TRAPS, or Training Repayment Agreement Provisions, which can require workers to pay thousands of dollars if they leave.

“Because TRAPs are often structured to prevent workers from transitioning to competing employers, they substitute for traditional noncompete clauses, which have come under growing scrutiny from federal government agencies and state lawmakers,” wrote Chris Hicks, a senior policy adviser at consumer advocacy group Protect Borrowers, in a blog post (2). “But TRAPs may be even more effective at limiting or blocking workers from leaving their jobs than traditional noncompetes, particularly for low-wage workers who can’t afford to pay their employer a substantial sum to quit.”

Some states, including California (3), have banned or limited certain stay-or-pay provisions.

Texas has not. Even if it had, it likely would not apply to the Gonzales case.

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The Dallas Morning News (1); Protect Borrowers (2); Morgan Lewis (3)

This article originally appeared on Moneywise.com under the title: The Dallas Fire Department accidentally paid a former firefighter $127,000 after he quit. Now it wants that money back

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