(a) (1) When a school employer determines a wage overpayment has been made to a school employee, it shall notify the employee in writing of the overpayment, afford the employee an opportunity to respond before commencing recoupment actions, and inform the school employee of their rights specified in paragraph (4). If the school employee agrees that the school employer overpaid them in the claimed amount, reimbursement shall be made to the school employer through one of the following methods mutually agreed to by the employee and the school employer:

(A) Cash payment or cash installment payments.

(B) Installment payments through payroll deduction covering at least the same number of pay periods in which the error occurred.

(C) The adjustment of appropriate leave credits or compensating time off, provided that the overpayment involves the accrual or crediting of leave credits such as vacation, annual leave, holiday leave, or compensating time off. Any errors in sick leave balances shall only be adjusted with sick leave credits.

(2) Installment payment amounts deducted from an employee’s salary or wages pursuant to paragraph (1), except as provided in subdivision (b), shall not exceed the amounts specified in § 706.050 of the Code of Civil Procedure.

(3) Absent mutual agreement on a method of reimbursement pursuant to paragraph (1), within 30 days of the school employee verifying the overpayment amount the school employer shall proceed with recoupment pursuant to subparagraph (B) of paragraph (1).

(4) If a school employee disputes the existence or amount of a school employer’s claimed overpayment made to the school employee, the school employer shall first initiate a legal action and obtain a court order or a binding arbitration decision validating the claimed overpayment amount before it may recover the overpayment amount. For purposes of this paragraph, binding arbitration may apply only when a memorandum of understanding between the school employer and an exclusive representative of the school employee sets forth procedures for adjudicating wage overpayment disputes that, at a minimum, meet the requirements and protections for school employees set forth in this section. If in court the school employee is represented by counsel supplied by the exclusive representative designated under the Educational Employment Relations Act (Chapter 10.7 (commencing with Section 3540) of Division 4 of Title 1 of the Government Code), then the provisions of subdivision (b) of § 3543.8 of the Government Code shall apply to that litigation.

(b) A school employee who is separated from employment before full repayment of the overpayment amount owed pursuant to subdivision (a) shall have an amount sufficient to provide full repayment withheld from any money owed to the employee upon separation, provided that the state minimum wage is still paid to the school employee. If the amount of money owed to the employee upon separation is insufficient to provide full reimbursement to the school employer, the school employer shall have the right to exercise any and all other legal means to recover the additional amount owed.

(c) A legal action shall not be taken by the school employer pursuant to this section to recover an overpayment unless the action is initiated within three years from the date of overpayment. The school employer shall not recover overpayments made to a school employee more than three years before the school employer initiates the action. If an overpayment involves leave credits, the date of overpayment is the date that the school 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.

(d) If the provisions of this section are in conflict with the provisions of a memorandum of understanding reached pursuant to Chapter 10.7 (commencing with Section 3540) of Division 4 of Title 1 of the Government Code, that was in effect on July 31, 2022, the memorandum of understanding shall be controlling until the expiration or renewal of the memorandum of understanding.

(e) For purposes of this section, “school employer” means the applicable administrative entity of any of the following:

(1) School district.

(2) County office of education.

(3) Charter school.

(Amended by Stats. 2023, Ch. 194, Sec. 10. (SB 141) Effective September 13, 2023.)