If I’m a 1099 contractor and I was pre-paid for services which will no longer be rendered, am I legally obligated to return the payment?

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If I’m a 1099 contractor and I was pre-paid for services which will no longer be rendered, am I legally obligated to return the payment?

I was hired by a company as a 1099 contractor. The company and I have had a huge falling out due to a lack of communication on their end. I was pre-paid

$860 for services that will not be rendered due to us parting ways. Am I

obligated to pay them back? Can they pursue legal action on me? I did not ask

for the payment to be pre-paid. They did this as a

Asked on February 21, 2018 under Employment Labor Law, Illinois

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

Yes, you do have to return the payment. The law simply does not allow you to keep payments to which you are not otherwise entitled, such as payments for work if the work was never in fact done. If you don't voluntarily return it, they could sue you for the money and will win, so it is strongly in your interest to return it without litigation.


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