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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?

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    "Why, if your last day was Dec 20?" Well, because between my manager and I, we had agreed upon the 31st being the final day. I guess I look at it like the holiday is a company benefit. I worked there the entire year, so I ought to be entitled to that benefit.
    – Rag Doll
    Mar 30, 2022 at 23:40
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    Did you not receive a resignation confirmation letter from HR after you handed your notice in? It usually mentions the official last day of employment. You'll have it in writing then. Otherwise, it's just word of mouth (between you and your manager).
    – Appulus
    Mar 31, 2022 at 8:14
  • Or, did you provide a written resignation with a last date? That is a form of proof as well. Mar 31, 2022 at 15:34
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    "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." - You should not wait to file your taxes, in the hopes your W2 will be updated and sent to you, to allow you enough time to do your taxes. You alone are responsible for filing you taxes on time, if you have to submit an updated filing then so be it, you really should not wait for a company that failed to remove you from the payroll to file your taxes.
    – Donald
    Mar 31, 2022 at 22:14
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    @DaveG: OP indicated an "unlimited PTO" policy. Under these conditions, no PTO is accrued and concordantly none is paid out for unused. My comment would be more explicit had I been specific and said: "Companies that use unlimited PTO typically do not allow PTO to be taken during a notice period." May 2, 2022 at 23:23

3 Answers 3

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I'm not a lawyer. If the money is worth enough to go to court over, contact a California labor lawyer.

They claim that they changed my last day to be the last day before this company holiday.

"Work at will" means you can leave at any time and they can un-employ you at any time. "Two weeks notice" is a curtesy from you to them, and they can decline it at any point with or without notice. "Thanks, for the notice. As of right now you are no longer an employee." is a very common policy for many companies in the US. Never expect an employer to hold their end of this "mutual" agreement.

The specific timings of your planned vacation, last day of work, etc. probably don't matter at all here.

Do I have to give the money back?

You probably don't have a legal leg to stand on in here. You got money for nothing. I wouldn't pay you to take a terminal vacation and most employers won't either.

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?

It may only take a 15 minute phone call with a tax accountant to get an idea if it's going to be a bigger headache. If you end up with bills, save all your receipts and you might be able to ask for compensation from your former employer. You'd likely end up with bad recommendations for future references though.

Always pay your taxes properly, promptly, and in full.

Jail time and fines are no joke, it doesn't matter who made the mistake. It's your tax bill.

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I am going to ignore the determination of the last day of work, and just look at the last two checks:

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).

You write this in late March 2022:

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.

Unless those two checks were given to you or deposited in your bank by 31 December those checks did not appear on the 2021 W-2. They are 2022 pay checks. Even the one that straddled the year wouldn't count for 2021. It goes by payday, not when the hours were worked.

They will not need to revise the 2021 W-2. Double check your pay stubs. The W-2 should match the last paycheck you received in December 2021. If they tried to add the two 2022 checks to the 2021 W-2 they have serious accounting problems. If they this wrong that should be reported to the IRS and the state.

If they had noticed their mistake sooner with the last check, they could have quickly reversed the deposit. The first check is harder to determine the correct amount because the last day you worked will have to be determined.

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I'd consult the employee handbook for an official policy that you agreed to when you started. Jeez, you're posting this question in March, and they're trying to reverse course on something that happened in December? It's very suspect. It looks like they're making up policy as they go along.

It is problematic that you don't know the last day you worked. You might want to research that by looking through bank statements for gas, food, or other customary purchases you'd only have been making while working on the job.

If you turned in a resignation whereas your last day was Dec 31, in writing, and they did the normal exit interview stuff but never raised any "policy" objections, then I'd say they're stuck with honoring the Dec 31 date. Send the last check (1/8-1/21) back in its entirety. Use a site like paycheckcity.com to figure out what the other check would have been if they only paid you for Dec 25-31 (a "pro-rate", sort of, but the site will help you get the tax calculations more correct). Keep that amount, and return the rest with a note on how you derived that number.

As for your taxes, I hope you've already filed for a six-month extension for 2021. Obviously the last check doesn't apply to 2022. Hopefully the company will play ball with this approach and revise your W-2 accordingly. If not, consult with your tax professional on the best course to take.

I am not an attorney, but this seems to be the most sensible way to get them to leave you alone.

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