If I was accidentally paid money by my employer, must I repay it if I honestly thought that I was entitled to it and have long since spent it?

I went out on medical leave a year ago. At the end of my FMLA my doctors did not release me to return to work and I am still unemployed illness not work related. My employer sent out a statement in early spring saying I had money in the pension plan and I contacted HR to inquire about cashing it in. After a couple of months of going back and forth, HR said they would see what they could do and shortly after I received a check in the mail. Now, months later, I get a call saying that it wasn’t money from the pension plan but money sent in error and they want me to repay it. I have long spent the money and even thanked the HR person that helped me for getting the full amount. Am I obligated to pay this money back?

Asked on September 29, 2015 under Employment Labor Law, North Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

Yes, you are obligated  to repay it an error does not give you the right to keep another's property or money. For example say that are paying your bills, and have a large bill from a plumber and smaller bill from the electrician. You accidentally pay the electrician the larger amount. The person in the electrician's office who received the money was not the electrician who actually made out the bill and assumes that if you paid it, that's what you owed. The fact that you accidently sent them too much money and they innocently thought it was theirs would not let them keep it once you find the mistake--they'd have to return it to you. Similarly, if your company distribures money to you to which you are not entitled, you must return it an error does not create a right to property. It doesn't matter if you spent it already--that is not the company's issue.


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