If Igot abonus check from my former employer, do I have give it back ifit claims that it made a mistake?

I left my company over 2 months ago. I was to be paid my annual bonus a month later. The bonus was a specific calculation that was a percentage of fees/commissions that I generated for the firm. I filed a claim with labor relations and got a check in the mail that week. Now the company is saying they made a mistake and want the money back. it is threatening to sue me if I don’t return it. Do I have to? What are the potential consequences if I don’t?

Asked on March 9, 2011 under Employment Labor Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

You say that the bonus was a "specific calculation that was a percentage of fees/commissions." If that's the case--and the calculation or formula was known to you (e.g. in a bonus or commission letter or agreement) and the bonus was miscalculated, then they can get the part of it in error back; people and businesses are not obligated to pay out based on a math error, typo, oversight, etc. If you don't return it, they could sue you for its return; instead, they may hold to the amount that should have been paid per agreement.

If you think it was actually paid and calculated correctly, you can refuse to return it and, if sued, present your case or evidence--but you'll be looking at court and legal costs to defend it, so you have to weigh if it's worthwhile.

If the bonus was discretionary and they made the decision to give it to you, they can't after the fact ask for it back--there is no "seller's remorse." Once the decision is made and the money paid, a discretionary decision (not based on a known formula, etc.) can't be rescinded.


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