CSEA vs State of CA - Wage & Hour Case Law

wd40

Does anyone have the actual ruling for: CSEA vs State of CA, 1988?
It deals directly with the overpayment of wages (in CA, vacation is considered wages and therefore cannot be applied retroactively).

We are changing our payroll from current to one week lag so that our payroll accounting can be easier to account for. On a current system (when the pay date equals the Period Ending date) oftentimes the paperwork for that week has not been received. Our standard method was to make adjustments on the next payroll cycle and 'prepay, if you will' everyone for 40 hours.

This is a no-no in you are considered about your cash flow. As per the CA Labor Commissioner, you are welcome to pay using this method however you are not allowed to post to the next pay changes (vacation, sick, miscalculation of hours) that would result in a decrease (again, if you charge 8 hrs vacation, you are in essence deducting future wages as vacation is defined as vested wages in CA) of regular or vested wages. So if you are comfortable with the overpayment, great. But in our case, our employees have not been turning in their vacation/time off notices. So while we once posted the changes next pay period, this has created a loophole where they can 'save' hours until we create better checks & balances for getting their paperwork - which is, of course, much easier when the Period Ending date is one week before payday.

Evidently it is this Case Law: CSEA vs State of CA, 1988, which has set the precidence for this type of wage ruling. I encourage each of you to check it out as it was a major shock for our company. Again, if anyone has the actual case study or an idea of where I can get it, please advise. We were told by the Labor Commissioner that if an employee presented a claim stating that they were not paid according to the period ending dates that we reflected (since we would be adjusting them on the next check) we would lose and pay the fines each and every time.

Out of curiousity, how many companies pay on a current system. If so, why? Don't forget to name your State. I think the rules outside of CA leave a bit more breathing room.

Sincerely,

Bobbi Richards

Hatchetman

[font size="1" color="#FF0000"]LAST EDITED ON 08-04-03 AT 05:10PM (CST)[/font][p]In essence what the court held was that the State as an employer could not garnish wages that were due to the employee simply because the money owed was that of the employer. It held that the law did not allow the employer to "self-help" in that regard. So, consequently, as with any other indivdual or entity who tries to recover money from an individual, the employer must use approapriate legal remedies to recover monies due to it by the employee and go through the garnishment process in court if that what it needs to do.

Although it relied on State law addressing the State as an employer and claims against the state, it did cite a previous case involving a private employer -- the Saunders Company in 1981 -- in which employee Barnhill's wages were off-set by the employer because of monies the employee owed to the company. In the 1981 case, that State Appellate Court ruling uphel a lower court's decision barring the "off-set."

The Industrial Welfare Commission (Labor Commission) does allow the employer to deduct the cost from the last pay check of any employer-provided tool or uniform that is not returned by the employee. Other than that, thge emplyer's rights to recover monies without a legally imposed garnishment, including wages paid to the employee (whether they were overpaid, of course, could be a matter of facutal dispute in the first place). Otherwise, now California Laobr Cede Section 221 prohibits the employer from "self-help" garnishments.

The relevant provisions from the 1988 Opinion [California State Employees' Association v. the State of California 198 CalApp3d 374 (1988)]are:

"Both the wage garnishment law and the attachment law protect wages from creditors. The wage garnishment law provides the exclusive judicial procedure by which a judgment creditor can execute against the wages of a judgment debtor, except for cases of judgments or orders for support. (Code Civ. Proc., § 706.020.) [...] It limits the amount of earnings which may be garnished in satisfaction of a judgment and establishes certain exemptions from earnings which may not be garnished. (See Code Civ. Proc., §§ 706.050-706.052.) The attachment law expressly prohibits any prejudgment attachment or levy of execution against wages. (Code Civ. Proc., § 487.020, subd. (c).)

"Insofar as the attachment law and wage garnishment law reflect or establish public policy, it is obvious that they provide substantial protection for wages against both pretrial attachments and enforcement of judgments. 'The policy underlying the state's wage exemption statutes is to insure that regardless of the debtor's improvidence, the debtor and his or her family will retain enough money to maintain a basic standard of living, so that the debtor may have a fair chance to remain a productive member of the community. ... Moreover, fundamental due process considerations underlie the prejudgment attachment exemption. Permitting appellant to reach respondent's wages by setoff would let it accomplish what neither it nor any other creditor could do by attachment and would defeat the legislative policy underlying that exemption. We conclude that an employer is not entitled to a setoff of debts owing it by an employee against any wages due that employee.'

"In Barnhill, a private employer deducted from an employee's final paycheck the balance of a promissory note which the employee owed to the employer. No statute authorized the deduction, and the Labor Code required immediate payment of unearned wages at the time of discharge. Despite these distinctions from the instant case however, the Barnhill court's statement of public policy is correct."

I've deleted the case references.

By the way, this was a California Appellate Court ruling; not the State Supreme Court. But it was never reversed.