In California, the Division of Labor Standards Enforcement (DLSE) views deductions from wages to recover overpayments to an employee as unlawful deductions under the law. Wage deductions in California are regulated by numerous court decisions as well as California Labor Code §221, which stipulates that it is unlawful for an employer to collect or receive any part of wages already paid to an employee. However, the law does allow for an employee to voluntarily agree to repayment of any overpaid wages as long as the employee's wages are not reduced below minimum wage.
See California Department of Industrial Relations Opinion Letters 1999.09.22-1—Deductions for Overpayment of Wages and 2008.11.25.1 - Wage Deduction Authorization for Overpayments Due to Payroll Practice
Deductions from final wages are not permitted, even with employee consent. See Barnhill v. Sanders 125 Cal.App.3d 1 (1981).
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