What are my responsibilities if my employer continues to direct deposit my regular paycheck to my account despite the fact that I have been laid off?

UPDATED: Jun 5, 2012

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What are my responsibilities if my employer continues to direct deposit my regular paycheck to my account despite the fact that I have been laid off?

My employer laid me off and issued a final paycheck including unused vacation time. Unexpectedly, they have continued to direct deposit my regular pay, minus government taxes, each pay period for the past 6. Due to this I have so far declined unemployment benefits. I have not reported this to my employer since it has been the only way for me to pay monthly bills and my mortgage payment during my job search. What are the legalities of this are and what are my responsibilities?

Asked on June 5, 2012 under Employment Labor Law, Michigan


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You have to return the money if the employer asks for it: if the amounts you are receiving are pay--salary or wages; i.e. they are, as you indicate, simply failing to discontinue your payroll direct deposit--but your employment has been discontinued, then you are being paid in error. Unfortunately, an error does not give a person any right to keep the money; so just as if, for example, you accidently sent two rent or mortgage checks for the same month, the landlord or bank would have to return the extra one (or at least credit it vs. your next month's payment), so, too, if you are accidentally overpaid, you have to return the money. The employer may at wiill demand it, and you'd have to return all it immediately--even if you don't have it. (In which case they'd sue you and get a judgment against you, which they could enforce in a variety of ways.)

Moreover, if you are knowingly taking money which you are aware you are not entitled to, it is not impossible that they could make out a case that you are stealing the money and press charges for one or another form of theft.

Legally therefore, your correct response is to notify them of the error and make arrangements (e.g. a payment plan) to repay it. Bear in mind that at some point, they will almost certainly discover their mistake--for example, at the end of the year, when they are reviewing and closing their books. The more money you accept, the harder it will be to repay it later.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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