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Repayment of Wages

edited August 2010 in General Payroll Topics
Due to a HR/Payroll error we have an employee who was overpaid $0.50/hour for the last 8 months. According to California law we can't ask her to repay the money back.

Is there anything we can do?

Comments

  • An option that I'm not fond of would would be to decrease his salary by .50 or 1.00 until your company can recover the wages that were overpaid. You can do this as long as the employee is aware of the rate change in advance. Keep in mind that the reduction cannot take him below minimum wage.

    I would chalk it up to an internal error and allow the employee to keep the funds.

    I would definately research the paper trail that led to this error going unnoticed for 8 months. View this as an opportunity to create procedures for requesting, authorizing, updating, and auditing employee wage increases.
  • Thank you PrJeff.

    And we have figured out a way to double check all salary changes so something good has come out of this. I think what bothers me the most is that the emp signed an offer letter stating she would receive the decrease in November, and when asked why she didn't come and let us know she said she didn't look at her check. She kept saying she doesn't do payroll so this is not her fault. Which I agree, but you know if she didn't get an increase when she was supposed to she would have been up here so fast complaining about it not being on her check.

    It's like she stole from the company and got away with it.

    Oh well, thanks again!!
  • I don't believe that's quite right. You CAN ask. If she doesn't agree, you can't take it upon yourself to recover the money through paychecks.

    Didn't the employee know what her hourly rate was supposed to be? It's on the paystubs, right?
  • pattypa wrote:
    I don't believe that's quite right. You CAN ask. If she doesn't agree, you can't take it upon yourself to recover the money through paychecks.

    Didn't the employee know what her hourly rate was supposed to be? It's on the paystubs, right?

    As stated below by David, we can't ask for it back in California.
    Before we changed her pay rate in the system, she signed an offer letter stating the demotion and the decrease to her hourly rate. She said she didn't look at her check to see if it went through or not. She said she doesn't look at her check(she has direct deposit) in general. Even if she doesn't look at her check, she would have seen a decreased amount deposited into her bank account if the decrease went through.
  • Danay wrote:
    Due to a HR/Payroll error we have an employee who was overpaid $0.50/hour for the last 8 months. According to California law we can't ask her to repay the money back.

    That is not exactly correct. CA has a prohibition against "self help" remedies where the employer unilaterly puts their (the employer's) hand in the employee's pocket and helps themself. However a CA employer is in no worse condition then an arm's length third party. The employer can still take the employee to court, get a wage garnishment and use the garnishment to legally deduct the wages.

    Reducing future wages is complicated. Me saying Bob is a jerk and will be paid less from this point on is legal. Me saying Bob is a jerk who owes me money and I will reduce wages to get my money back is legally questionable. Me telling Bob give me money or else is legally questionable. In the last two situations, Bob should file a wage claim with CA-DLSE. Might work. Might not work. But Bob has something of case. I am going to suggest that the OP might want to read chapter 11 of the CA-DLSE before getting too deep into this.

    Labor Code Section 224.
    The provisions of Sections 221, 222 and 223 shall in no way make it unlawful for an employer to withhold or divert any portion of an employee’s wages when the employer is required or empowered so to do by state or federal law or when a deduction is expressly authorized in writing by the employee to cover insurance premiums, hospital or medical dues, or other deductions not amounting to a rebate or deduction from the standard wage arrived at by collective bargaining or pursuant to wage agreement or statute, or when a deduction to cover health and welfare or pension plan contributions is expressly authorized by a collective bargaining or wage agreement.

    CA-DLSE manual section 11.2 Employer May Not Collect Or Receive Wages Paid Employee. Labor Code § 221 prohibits an employer from recovering wages paid. This provision prohibits an employer from receiving from an employee any wage paid by the employer to the employee either by deduction or recovery after payment of the wage: “It shall be unlawful for any employer to collect or receive from an employee any part of wages theretofore paid by said employer to said employee.”


    Thanks for this information.
  • http://www.dir.ca.gov/dlse/opinions/1999-09-22-1.pdf.

    According to DLSE, "If an employer deducts any portion of an employee’s paycheck because the employer previously overpaid the employee, DLSE would view the deductions unlawful. DLSE would not, however, view the deduction unlawful IF the employer and employee have previously entered into a written agreement allowing for deductions based on the voluntary consent of the employee, provided that the amount the deduction from any one paycheck cannot exceed the amount authorized by the employee for such deduction, and that after making any such authorized deduction, the employee must still receive no less than the minimum wage for all hours worked in the pay period".

    So I agreed with Patty, the employer is allowed to ask the employee to repay but the employee has the right to refuse. If employee refused, then the employer has to go through the court to get a garnishment order like any other creditor to get back the money.
  • Just to chime in to what others have already written, yes you can deduct overpayments from an employee's paycheck (in CA), as long as you have it in writing to do so. Most of the time employees are cooperative in this, especially if they value their jobs.

    With that said, if you cannot obtain the employee's written approval to do this, then you will need to make a decision: Go the legal route to obtain a garnishment order or forget the whole thing and let the employee walk with the extra bucks.....

    :x
  • Danay - Are you willing to share the total dollar amount we are discussing in this thread?
  • Yes she was overpaid $630.59.
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