Employee Overpayment

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Employee Overpayment

In the state of California, how can an employer recoup their money for an
accidental overpayment? We issued an employee a check and then voided it, then
reissued the check. Mistakenly we gave the employee the both checks and they
cashed it.

Asked on May 26, 2018 under Employment Labor Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

You can ask the employee to repay, either immediately or over time, and either by writing a check back to you or by you deducting money from their paycheck until it is paid.
If they don't voluntarily repay you or let you do payroll deductions, you have to sue them for the money, unfortunately: the law is very clear that an employer cannot withhold money from paychecks without either employee consent or a court order (such as for wage garnishment, after winning a lawsuit). 
So talk to your employee first; then sue if you deem it worthwhile.
Bear in mind you can terminate him for cause for taking/keeping money to which he is not entitled. So if the employee will not work it out with you (e.g. through agreeing to payroll deductions), you can let him know that you will have to terminate him.
If you do get a repayment or payroll deduction agreement, get it in writing and signed by the employee.


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