Roseville, CA asked in Employment Law for California

Q: Can a company deduct an overpayment? Mistake was made by the company

The company made a $200 overpayment. Employee thought it was for annual SERP award and she didn't question the money. Her supervisor and manager approved the timesheet where the mistake was made. Said company turned around and deducted the money from the next paycheck. She is now facing eviction based on salary reduction.

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2 Lawyer Answers
Lawrence  Glasner
Lawrence Glasner pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Redding, CA
  • Licensed in California

A: Yes, a company can typically deduct an overpayment made to an employee if they made it incorrectly. However, there are some important considerations to keep in mind.

First, the company should ensure that it made the overpayment in error and not because of misunderstanding or miscommunication. If the overpayment was intentional, such as a bonus or advance, the company cannot deduct the overpayment from the employee's pay without the employee's consent.

Second, the company should follow the applicable laws and regulations regarding overpayment deductions. These laws may vary depending on the jurisdiction, so it's important to consult with legal counsel or an experienced HR professional.

Third, the company should communicate with the employee about the overpayment and the proposed deduction. This can help prevent misunderstandings or disputes and may also be required by law.

In summary, while a company can deduct an overpayment made in error, it's important to make sure the deduction is legal and appropriate and to let the employee know about the situation.

James L. Arrasmith
James L. Arrasmith pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Sacramento, CA
  • Licensed in California

A: If the overpayment was made by the company due to an error or mistake, the company may be able to deduct the overpayment from the employee's future paychecks to correct the mistake. However, the deduction must comply with applicable laws and regulations, such as the Fair Labor Standards Act (FLSA).

Under the FLSA, an employer may only make deductions from an employee's paycheck if the deduction is required by law, authorized by the employee in writing, or for the benefit of the employee. If the deduction for the overpayment was not authorized by the employee or is not otherwise allowed under the law, the employee may have legal recourse to challenge the deduction.

It's important for the employee to review their employment contract, company policies, and applicable laws to understand their rights and options for addressing the situation. They may want to consider consulting with an employment law attorney for guidance and assistance in challenging the deduction and addressing any related issues, such as potential eviction due to salary reduction.

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