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Brandon M.
Brandon M., Counselor at Law
Category: California Employment Law
Satisfied Customers: 12620
Experience:  California licensed attorney
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CA WAGE LAW(S) A wrongly categorized non-exempt (hourly)

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CA WAGE LAW(S): A wrongly categorized non-exempt (hourly) employee - dubbed "exempt" by employer for the usual reasons - has been overpaid a set salary instead of the correct hourly rate. This employee has been working less than 40 hours a week and has said nothing to the employer about the incorrect classification until the employee was let go. Now, there is a case before the DLSE where the now-former employee wants his salary overpayment repaid in the form of OT he claims he's entitled to since he now knows he was a non-exempt employee all along.

Simply put, can an employer IN CA reclaim salary overpayments? Can the overpayments be applied to other types of wages owed? Other jurisdictions, per the ∆'s attorney, do not allow the employer to take back overpayments, loosely stating that once it's in the employees hands, it belongs to the employee. So far, only CA law that follows this reasoning has been found under the CA Labor Code. The employer will no doubt be on the hook for OT if the employee is confirmed non-exempt, but must the employer also give up rights to reclaim salary overages for time not worked?
I can't speak to other states, but a California employer may generally recover from its employee any wage or salary overpayment. There is no "finders keepers, losers weepers" law here. The employee is entitled to their compensation under the law; nothing more. If the employer accidentally overpays, the employee is not legally entitled to unjust enrichment simply because of an error. There is no other way to say it.

"Yes", a California employer may reclaim salary overpayment.

I understand that you may have follow-up questions. Let me know if further clarification is needed. Thank you.
Customer: replied 6 years ago.
Thanks for the quick response - and one that I like! Is this a spirit of the law or letter of the law opinion? Any code/case to cite?
"Unjust enrichment" is a legal term of art that is so embedded in our common law system of governance that it pre-dates our Constitution. In fact, it pre-dates the Magna Carta. It is exactly what it sounds like: you don't get something for nothing.

This article is an interesting discussion on the legal underpinnings of recovery for unjust enrichment in California. The author's point is that the strength of the doctrine has been deteriorating in the California courts, but my point is that it would still prohibit an employee from just keeping money that was erroneously given to him (as would common sense). If I was at the table, I would politely tell the opposing counsel that I don't care what other states say because we are not in other states: what is their legal theory as to why California law prohibits retention of the funds? I would also suggest that the opposing party pay close attention to what he is paying his attorney for services rendered.
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