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MOU Provision Authorized Charter County To Recover Overpayments From Employees
The Association for Los Angeles Deputy Sheriffs (ALADS) is the union representing sworn non-management peace officers employed by the Los Angeles County (County) Sheriff’s Department (Department). The memorandum of understanding (MOU) between ALADS and the County includes provisions that address “Paycheck Errors,” including overpayments and underpayments.
The MOU provision on overpayments states that “employees will be notified prior to the recovery of overpayments.” Further, “recovery of more than 15% of net pay will be subject to a repayment schedule established by the appointing authority under guidelines issued by the Auditor-Controller. Such recovery shall not exceed 15% per month of disposable earnings (as defined by State law), except, however, that a mutually agreed-upon acceleration provision may permit faster recovery.”
In April 2012, during a conversion to a new payroll system, the County failed to apply an agreed-upon cap to certain bonus payments. The error resulted in salary overpayments to 107 deputies.
In May 2017, the County sent letters to these deputies, informing them of the overpayment, and giving them two repayment options: remit the payment in full, or repay the amount through payroll deductions at a specified rate. In April 2018, the County sent the deputies letters stating it would deduct the overpayments as described in the prior letters.
In May 2018, the County began the paycheck deductions. Thereafter, ALADS filed grievances on behalf of the affected employees, challenging the deductions from their paychecks to recover the overpayment amounts.
While the parties addressed the grievances through the County’s administrative procedures, ALADS also went to court. ALADS sought a writ of mandate and declaration that an overpayment provision of the MOU between ALADS and the County was unenforceable because it violated wage garnishment law and the Labor Code. Specifically, ALADS alleged the deductions violated Labor Code Section 221, which makes it unlawful “for any employer to collect or receive from an employee any part of wages” paid to the employee. ALADS alleged that the wage garnishment law provided the exclusive procedure for withholding an employee’s earnings.
The County demurred to the writ of mandate on multiple grounds, including that ALADS failed to exhaust administrative remedies, and that neither Labor Code Section 221 nor wage garnishment law applied to the County. The trial court granted the demurrer solely on the ground that ALADS failed to exhaust administrative remedies. ALADS appealed, and the Court of Appeal affirmed the trial court’s ruling, but on the grounds that Labor Code Section 221 and the wage garnishment laws do not prevent a charter county from agreeing to MOU provisions regarding the recovery of overpayments.
The union argued it was not required to exhaust administrative remedies because the available administrative remedy would be futile since it would require all 107 deputies to bring individual grievances addressing the same issue: namely, the County’s ability to recover overpayments under the MOU. The Court of Appeal agreed, holding that the administrative remedy was inadequate because it would not provide “classwide” relief for the 107 deputies.
However, the County argued that ALADS could not state a valid claim because of the home rule doctrine, which gives charter counties like the County the exclusive right to regulate matters relating to its employees’ compensation. The Court of Appeal agreed and held the recovery of overpayments pursuant to an MOU was within the authority of a charter county as part of its exclusive right to regulate compensation. For similar reasons, the Court of Appeal noted that wage garnishment law did not prohibit the County from recouping overpayments.
Association for Los Angeles Deputy Sheriffs v. County of Los Angeles (2021) 60 Cal.App.5th 327 (2021).
A growing body of case law holds that the California Labor Code is not applicable to public entities unless a particular Labor Code Section states it applies to public entities. This case applied the home rule doctrine to authorize a charter county to adopt an MOU provision to deduct overpayment amounts, notwithstanding the Labor Code or wage garnishment laws.