California does not allow employers to correct overpayments of wages to employees through self-help by deducting wages from future paychecks without employees’ consent. The law is clear that it is unlawful for employers to collect wages already paid to employees. However, employers who mistakenly overpaid wages may have valid claims for unjust enrichment, restitution, conversion, etc. under certain circumstances against the overpaid employees. But that would require an employer to file a lawsuit against the employee which could be an expensive headache not worth pursuing.
Additionally, if an employee who was mistakenly overpaid sues their employer regarding another dispute with the employer, then that employer may have an affirmative defense to offset that overpaid amount from a judgment against the employer if the employee’s claims against the employer do not involve claims for unpaid wages against the employer.
However, employers can more easily recover overpaid wages if employees voluntarily agree in writing to those deductions. But if those authorized deductions cause an employee’s paycheck for any given pay period to fall below minimum wage for all hours worked in that pay period, then the employee may have valid claim against her employer for failure to pay minimum wage. Arguably, an employer may be able to discharge an employee for refusing to pay back the overpaid wages. That may invite a wrongful termination lawsuit though. As a result, employers may find it challenging to recover wage overpayments from employees who do not voluntarily agree to pay the money back.
(See Link(s): Labor Code Sections 221 and 224; DLSE Op. Ltrs. 1999.98.22-1 and 2008.11.25-1)