Bargaining Unit 7 California Highway Patrol Employees;
Many of you recently received a Notice of Overpayment for Shift Differential from CHP. CSLEA is working with CHP in order to obtain as much information as possible regarding the recent Notices of Salary Overpayment (CHP 456) issued to many CHP employees.
CSLEA is currently scheduled to meet with CHP Human Resources on 7/16/19 to obtain further information on this situation and will update you as we learn additional details.
We know there are many questions. Below are some of the answers we have received thus far from CHP.
Question: When will everyone get a copy of the breakdown of their Accounts Receivable (“AR”)?
Employees can contact their personnel specialist identified on their overpayment notice via email to request the detail for overpayment and the breakdown of the overpayment by pay period will be provided. This should be done within 15 days of the notice.
Question: If an employee refuses to sign to choose a repayment option before they receive the breakdown, will they be put on a payment plan per Govt Code 19838(a)(2)?
The employee should choose a repayment plan, sign and return the CHP 456N within the 15-day period. For the shift overpayment ARs, the employee has 30 days to contact their personnel specialist to amend their selection if they wish, as well as to negotiate a repayment plan.
If an employee refuses to sign, the commander will notate that on the CHP 456N and return it to HR for collection per the statute.
Question: What is the longest repayment plan CHP will agree to? Will it be a case by case basis?
By statute, employees are allowed to repay the overpayment over the same period of time as the overpayment occurred, except that if the overpayment extended for more than a one-year period, the employer has the right to request repayment over only a 12-month period (with some exceptions). However, the Department will not invoke its right to require repayment in only one year for this error and will instead allow employees to repay over the same period they received the overpayment.
NOTE: Employees who choose this option will have varying amounts withheld from their checks each month. (See example below.)
EXAMPLE: The state determines that PSD Jones was overpaid her shift differential in 33 of the 36 months covered by the review period. The total overpayment in that period was $1,000. (In 3 months of those 36 months, she did not receive any overpayment.) PSD Jones would be allowed to repay the $1,000 over a maximum period of 33 months. However, when choosing a payment plan that extends for the full period in which the overpayment occurred, employees’ monthly payments for repayment will vary from month to month, depending on how much of an overpayment they received in a given month. In other words, it will not be a payment that is simply the total overpayment divided by 33, resulting in an even deduction every month in that 33-month period. Instead, if PSD Jones was overpaid by $50 in one month, $25 the next month, $75 the following month and so on until her total of $1,000 was reached, then the amount deducted from the first monthly check would be $50, the amount deducted from the following monthly check would be $25, the amount deducted from the next monthly check would be $75 and so on until the repayment over the 33 months was completed.
Question: Once someone gets the breakdown, if they discover an error, what is the process for disputing the amount due?
If an error is discovered, the employee should contact their personnel specialist and provide the specific information and/or documentation to support their claim of error. If an error was made, it will be corrected, and the employee’s pay will be adjusted/corrected.
Question: How can we assure this does not happen in the future?
Upon learning of the SCO’s findings, the CHP took immediate action and has already fixed the issues beginning with the May 2019 payroll. The correct method of calculating the shift differential has already been implemented.
Question: How did this AR happen in the first place?
When employees work a night shift, they are paid at a slightly higher rate per hour than those who work during a day shift. This is called shift differential pay. A manual calculation error relating to a prior bargaining unit contract interpretation resulted in the double payment of the shift differential pay whenever the employee worked overtime.
Question: How was the mistaken amount calculated?
The amount overpaid was calculated at $.50 or $.75 per hour on the overtime hours worked by the employee.
Question: Is it different for each hourly rate a PSD makes?
The shift rate was the same based on straight time or time and a half, calculated on each hour of overtime worked. The total dollar amount of the overpayment varies depending on the amount of overtime worked by each employee and the employee’s workweek.
Question: Are CSLEA members relieved of an obligation to repay the salary overpayment as a result of lawsuits filed in the late 80s and early 90s by other unions pursuant to Government Code section 17051?
No, CSLEA members are not relieved of the obligation to repay as a result of those lawsuits. Government Code section 19838 is the government code which specifically controls salary overpayments/payroll errors made by the State of California to state employees and as such, it is the controlling government code which applies to this particular issue. Government Code section 19838 is referred to in the CSLEA Bargaining Unit 7 MOU (Section 5.2) as the method by which payroll errors will be handled.
Government Code Section 19838 specifically states:
(a) When the state determines an overpayment has been made to an employee, it shall notify the employee of the overpayment and afford the employee an opportunity to respond prior to commencing recoupment actions. Thereafter, reimbursement shall be made to the state through one of the following methods mutually agreed to by the employee and the state:
(1) Cash payment or payments.
(2) Installments through payroll deduction to cover at least the same number of pay periods in which the error occurred. When overpayments have continued for more than one year, full payment may be required by the state through payroll deductions over the period of one year.
(3) The adjustment of appropriate leave credits or compensating time off, provided that the overpayment involves the accrual or crediting of leave credits (e.g., vacation, annual leave, or holiday) or compensating time off. Any errors in sick leave balances may only be adjusted with sick leave credits.
Absent mutual agreement on a method of reimbursement, the state shall proceed with recoupment in the manner set forth in paragraph (2).
(b) An employee who is separated from employment prior to full repayment of the amount owed shall have withheld from any money owing the employee upon separation an amount sufficient to provide full repayment. If the amount of money owing upon separation is insufficient to provide full reimbursement to the state, the state shall have the right to exercise any and all other legal means to recover the additional amount owed.
(c) Amounts deducted from payment of salary or wages pursuant to the above provisions, except as provided in subdivision (b), shall in no event exceed 25 percent of the employee’s net disposable earnings.
(d) An administrative action shall not be taken by the state pursuant to this section to recover an overpayment unless the action is initiated within three years from the date of overpayment. If an overpayment involves leave credits, the date of overpayment is the date that the employee receives compensation in exchange for leave erroneously credited to the employee. For purposes of this section, leave hours are considered exchanged for compensation in the order they were credited.
(e) If the provisions of this section are in conflict with the provisions of a memorandum of understanding reached pursuant to Section 3517.5, the memorandum of understanding shall be controlling without further legislative action, except that if the provisions of a memorandum of understanding require the expenditure of funds, the provisions shall not become effective unless approved by the Legislature in the annual Budget Act.
Question: Is there any circumstance under which employees would be relieved of the obligation to repay the overpayment?
Yes, if the employee, either on their own or with the assistance of CSLEA, proves the overpayment notice was made in error and that they were not overpaid, the employee would be relieved of the obligation to repay. But, if the overpayment notice is accurate and the employee was overpaid, then the provisions outlined in Government Code section 19838, as detailed in the previous question, would apply. Again, CSLEA is working diligently with the CHP to obtain the appropriate information to help our members verify the overpayment prior to repayment.
Question: Will employees receive an amended W2 for any year they receive an AR?
There will be no adjustment of W-2s. HPM 10.3, Chapter 11 which states:
o Internal Revenue Service Ruling 70-177, 1970-1CB214, states that erroneous wage payments are subject to income tax at the time they are paid and, to the extent there has been no repayment of any overpaid amount to the employee within the same year, the employee’s Form W-2, Wage and Tax Statement, must reflect the full amount received by the employee in that year.
o When an accounts receivable (AR) is repaid by personal check/cash payment(s), the employee will not receive a tax reduction at the time of collection. The employee can recoup overpayments of federal and/or state tax amounts, if any, when filing an income tax return for that year. Taxable gross earnings will be reduced in the year that monies to satisfy the AR are collected, not in the year the overpayment occurred.
o When an AR is repaid by payroll deduction(s), the taxable gross of the payment to which the deduction is applied will be reduced by the taxable gross amount of the AR before federal and state taxes are computed. Therefore, it is to the employee’s immediate advantage to have an AR collected by payroll deduction.