I'm looking for some advice here. I live & work in California. I gave notice that I'd like to quit my previous job with my last day being the last day of the year. I also planned to take vacation for the last couple weeks of the year (one week of personal vacation, one week of company holiday time). My last working day was somewhere around the 20th of December. It's maybe worth mentioning that I turned in my laptop on this last working day, however I still had access to email and other corporate accounts even after the new year through my mobile device (IT also failed to properly shutdown my accounts).
I received two extra paychecks. The first paycheck I received straddles the new year and is for 12/25-1/7. When I received this payment, I was suspicious, but it was close enough to what I expected, that I didn't contact them. The second paycheck is a clear overpayment (1/8-1/21). Once I received this paycheck, I notified them that they were still paying me.
I was under the impression that I would be paid through the end of the year. However, the employer is asking for both paychecks back in their entirety. They claim that they changed my last day to be the last day before this company holiday. That's to say, they agreed to pay for my personal vacation, but not for the company holiday time). I argue that this wasn't clearly communicated. Note that I did not have any formal vacation days that I was owed; the company is using an "unlimited vacation" policy.
Now, taxes are upon us. I've received a W2 which has the amount with the overpayment. If I send back the two full checks now, they claim they will probably revise the W2 and send a new one. I have yet to file taxes. Also, they want me to rush with the payment before they report the quarterly taxes as to not have an impact for this year.
Once they finally realized the mistake, a couple days later, I started to receive mail about my benefits being terminated (mail was dated Feb, telling me that I have no coverage as of Dec 23rd). That leads me to believe that I was without medical coverage for a week or so.
This has already caused a lot of grief. It's also pretty frustrating since I thought I was going to be paid a certain amount, but that is no longer the case. I could've started my new job in December, but chose to wait until the next year.
Do I have to give the money back? Will figuring out my taxes now be a big pain? What if they're sufficiently complicated that I need to hire a CPA to straighten this mistake out? What can I do and/or what should I do?