Legal Question in Business Law in California

Re: contract up but still being paid

All businesses, both large and small, make mistakes. You are legally and morally obligated to notify the former employer that you are still receiving checks and to return the money.

Re: contract up but still being paid

With all due respect to attorney Starrett, if -you- were to argue to -the company- that they should or should not do something based on a "moral obligation," they would laugh at you. What you need to do depends on 1) the terms of your contract, and 2) how much you care about burning bridges with them. First of all, you need to not spend the money, as they could conceivably sue you and win. Or they could sue you and lose - this was the outcome of an similiar situation that happened to me once - because your defense is you were ready, willing and able to perform your end of the contract and, it's not your job to do their bookkeeping for them. Maybe they won't discover their mistake till after the statute of limitations expires which could be as long as four years. Then there are the tax implications. If you give, or they demand, money back, will you have to expend time and energy dealing with the IRS and/or retrieving amounts withheld for taxes? Will you be reimbursed for this? Bottom line: Do nothing, bank the money, pay taxes, if confronted down the road enter into settlement negotiations (preferably through a lawyer), repaying enough $ that they won't sue for the rest. When you settle, get them to agree in writing not to disclose the overpayment dispute to anyone, and to give you a positive letter of reference.

Re: contract up but still being paid

OK, here's a third point of view. I agree more with Mr. Starrett than Mr. Stone.

The law in California is that money overpaid by mistake must be refunded unless two factors are present: (1) the recipient was unaware of the mistaken overpayment at the time it was made; and (2) the recipient has so changed his position in justified reliance upon the money being rightfully his that it would be grossly unfair to oblige him to cough it up.

Doesn't sound as though you could satisfy either of these requirements, so, I'd say return it before you get so accustomed to having the $$$ that making the refund is a hardship when you're asked, or sued, for it.

Re: contract up but still being paid

If ethics and morals don't convince you to return the unearned money, then the fear of lawsuit or even arrest should come to mind. Your disclosure on the internet would prove your knowledge of the situation, barring a defense of 'mistake' or lack of knowledge.