I received a paycheck from an ex-employer via direct deposit. It looks like they forgot to take me out of their automatic system, because I definitely shouldn't have received this check.

I am a U.S. Citizen, and Oregon resident. What are my legal obligations here? Is keeping the money illegal?

I am aware the ethical thing is to return the money, but I am curious about the legal issues in this case.

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    How long has it been since you worked there? Is it possible it was your least paycheck, or a cash out of vacation time? Or some bonus you were entitled to? – mhoran_psprep Mar 11 '12 at 19:28
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    You should return the money, and better if you contact them on your own and not wait for them to claim it from you with interest or something like that. Be honest. – littleadv Mar 11 '12 at 20:56
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    If you got your last paycheck on your last day of work, it is possible you had another check coming, since often the processing of checks lags a little behind the days worked, depending on how they do it. (I had a final paycheck sitting in the NY State Treasury for 14 years for that reason). But the pay stub should indicate the pay period, shouldn't it? – Chelonian Mar 11 '12 at 22:43
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    I get direct deposit, too, but always get a "pay stub" or fake check or whatever to indicate the hours. I guess you didn't there. – Chelonian Mar 11 '12 at 23:45
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    A similar thing happened to a co-worker of mine. He hadn't left the company, but HR entered his dept code (969) accidentally as his hourly rate. His next direct deposit semi-monthly paycheck was $32K. He kept the stub and tacked it to the wall of his cube and when people noticed he'd say, "Oh, you don't make that much?" – JohnFx Mar 12 '12 at 13:11

Based on your comment that you were not owed the money, yes you do have to return it.

The paperwork you agreed to when you setup the direct deposit, gives them the ability to reverse the transaction. I do not know the maximum time they have to pull it back, but they could do it without warning. If you spend the money and they pull it back, you will not be warned and you might overdraw the account.

They might not notice for days or weeks, depending on how they do their audits. It is unusual for a large company to do this because their time card systems are designed to prevent this problem.

If they are on US government contacts this would be bad for them. If they then billed the government for work that was not done, or they billed the wrong customer, they can face fines if the government finds out.

You probably have some time before you have to tell them, but I would wait no more than a business day or two before contacting them. You might find out that they do owe you the money.

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  • Thank you. They are not a large company, and they do not have any government contracts. I was a salaried employee, so there was no "time-card" system. I never submitted hours worked for when I was with them. – Tim Mar 11 '12 at 20:07

I had the same thing happen to me in late 2010. I contacted the big company's bored-sounding payroll department - after wading through the phone menu, and more than one "all of our operators are busy, please call back later <click>" - and told them I had this extra money. The guy in India told me that my petition would be investigated and that a ticket would be opened. I heard nothing for a couple of weeks. I followed up with payroll. They said that my petition investigation had determined that I did indeed get paid extra, and they'd be sending me a letter demanding the overpayment.

I received no letter, and a month later (January 2011) I got a W-2 with the paycheck included on it. I decided that I'd spent enough of my own time and effort on it, and if they wanted it back, the ball was in their court. I changed my bank account numbers to prevent them from auto-debiting my account, and spent the money as if it was mine.

I have not heard anything about it since then.

From what I was able to determine, once I'd made a good-faith effort to return it, I was in the clear.

And for what it's worth, it's not like you can just "return" it. Among other things:

  • Withholdings were sent to the IRS in your name, and you have no way of getting that back
  • Money was deposited in your 401(k) and you can't touch that until you're 59.5 years old.
  • The amount they gave you will be included on your W-2, meaning you'll have to pay taxes on it.
  • There may have been other withholdings for insurance or other employee-paid things; you have no way of getting that back.

I certainly wasn't just going to mail the company a check and hope for the best.

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    This is good to know. I hadn't considered the tax implications. – Tim Mar 12 '12 at 4:07

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