Berkeley Unified School District (2012) PERB Decision No. 2268-E (Issued on 5/29/12)
This case involves a proposal by a school district to recoup erroneous overpayments in salary by withholding from an employee’s wages the amount of the overpayment over the same period of time the error occurred. The union refused to bargain over the proposal as a non-mandatory subject of bargaining. The district insisted and eventually declared impasse. The union then brought this unfair practice charge alleging that the district committed an unfair practice by insisting to impasse on a non-mandatory subject of bargaining.
The ALJ ruled in favor of the union. In adopting the ALJ’s proposed decision, the majority, comprised of Chair Martinez and Member Huguenin, agreed that the district’s proposal was a non-mandatory subject of bargaining. The majority even went further and held that the proposal was an improper one because it contravened state labor statutes. Thus, unlike a normal permissive subject of bargaining that the parties can choose to bargain over if desired, the Board found that the parties could not properly bargain over the district’s proposal even if they wanted to.
In its decision, the Board stated:
We conclude, with the ALJ, that California’s state policy against prejudgment attachment of employee wages, codified in garnishment and attachment statutes (discussed in CSEA) and in Labor Code sections 221-224 (discussed in Social Services) establishes an inflexible standard and immutable provisions. Under California law, absent an employee’s written authorization an employer is forbidden to reduce wages currently due and owing to the employee in order to recoup monies allegedly due and owing by the employee to the employer. Exceptions to this general rule are described in Labor Code section 224. The only exception permitted solely on the basis of an express authorization in a collective bargaining or wage agreement is a deduction for health and welfare or pension plan contributions. [Citations omitted]
The state statutes regarding wage garnishment, attachment and deductions are mandatory. Because the recoupment procedure embodied in the contract provision here at issue alters the state’s statutory scheme, the provision is not only non-mandatory but, more importantly, nonnegotiable.
Member Dowdin dissented. On the issue of whether the district’s proposal is a mandatory subject of bargaining, Member Dowdin rejected the majority’s reliance on CSEA v. State of California (1988) 198 Cal.App.3d 37 in which a court of appeal held that the state could not collect salary overpayments through paycheck deductions. Member Dowdin argued that CSEA is distinguishable because it did not involve a collective bargaining agreement. Instead, Member Dowdin would have followed the appellate court’s decision in Social Services Union v. Board of Supervisors (1990) 222 Cal.App.3d 279 in which the court permitted an employers’ recoupment of past due health insurance premium increases. In that case, the court noted that if an employer could not utilize the collective bargaining process to achieve the recoupment, the employer would be forced to file individual lawsuits against its affected employees. That, according to the court, would not promote public policy.
- Employer proposals to recover salary overpayments through paycheck deductions are not uncommon, but as this case demonstrates, such proposals are highly problematic. In the public sector, part of the confusion stems from the lack of clarity over the coverage of state wage and hour laws. Many people are unaware that much of California’s wage and hour laws do not apply to public sector employers. Even more confusing is the fact that some labor code provisions apply to only certain public sector employers and not others. However, on the issue of wage deductions (Labor Code sections 221-224), I know of no case that exempts public employers from coverage.
- The Division of Labor Standards Enforcement (DLSE) issued an opinion letter in 2008 on the subject of wage deductions to recover salary overpayments. The gist of the opinion is that such deductions are allowed only with express employee consent. The opinion letter cites extensively to the CSEA case and warns that, “Employee authorization is critical to permitting such deductions.”
- Given the CSEA case and the DLSE opinion letter, the next logical question is whether an agreement in a collective bargaining agreement constitutes employee authorization. The majority argues that a collective bargaining agreement does not constitute such authorization given the language of Labor Code section 224. That section recognizes the validity of a deduction authorized by a collective bargaining agreement, but only with respect to health insurance premiums. My strong belief is that DLSE would take the same position.
- There are severe penalties for violating California’s labor statutes. Unlike other provisions of the Labor Code, violating Labor Code sections 221-223 can also be a misdemeanor. So public employers should tread very carefully in this area. In terms of deductions for wage overpayments, my advice is definitely to get individual employee authorization for such deductions notwithstanding any collective bargaining provision.