Employer Must Negotiate With Union Before Recouping Overpayments

Teamsters Local 839 represents corrections officers in Benton County, Washington. In November 2016, the Benton County Auditor’s Office discovered that an accounting software error had caused the County to overpay 85 corrections officers in the June through September 2016 pay periods. Whenever hours were entered into the accounting system under the Kelly Time Used pay code, the software error caused an improper increase in compensation.

The County decided to recover the overpayments through deductions from subsequent wage payments as provided in a Washington statute allowing recoupment of overpayments through wage deductions not exceeding 5% of the employee’s disposable earnings in a pay period. Through a letter dated November 14, 2016, sent to impacted corrections officers, the County stated that it had commenced the statutory process for overpayment recovery and requested that the employee indicate his or her “preferred deduction amount” and sign the letter.

The County gave each employee three options for the preferred deduction amount: 1) Deduct the full overpayment amount from the employee’s next paycheck, 2) deduct an employee-specified amount from future paychecks, or 3) deduct an amount that would not exceed 5% of the employee’s disposable earnings in a pay period from future paychecks. If the employee did not respond “within 20 days of delivery or the overpayments and/or amounts were not disputed,” the County would begin withholding the statutory 5% disposable earnings, beginning with the employee’s January 2017 paycheck. The County did not send a copy of the November 14 letter to Local 839.

When Local 839 learned of the County’s actions, it sent the County a demand to bargain over the issue. The County responded by letter stating that it was “not able to negotiate or bargain the authority of the Auditor’s office and their statutory responsibilities for recouping overpayments.” In January 2017, the County began deducting wages from paychecks and hours from accrued leave banks. Local 839 responded by filing an unfair labor practice complaint with Washington’s Public Employment Relations Commission (PERC).

A PERC hearing officer found that the County had committed an unfair labor practice. The Hearing Officer found that “wages are unquestionably a mandatory subject of bargaining. Employees have a strong interest in subjects related to wages. The County’s decision is directly related to wages because it concerns implementing employee wage deductions and accrued leave cash outs to recover money which the employees originally received as wages.

“The County’s decision is not, to any substantial extent, a management prerogative. The County correctly argues it has an obligatory interest in collecting repayment for any wage overpayments. However, this interest in repayment does not equate with an interest in deciding how that repayment is made. As evidenced by this case, multiple repayment options could satisfy the County’s interest in collecting repayment, and this fact weighs against an argument that the County has a strong interest in deciding the specific repayment method used.

“Balancing the employees’ and employer’s interests in the decision, the employees’ interest in wages outweighs the extent that the decision is a management prerogative. The decision’s relationship to employee wages is therefore the predominant characteristic under the balancing test, making the decision a mandatory subject which the County had a duty to bargain.”

The Hearing Officer then turned to the question of the remedy: “As of August 8, 2017, all 85 affected corrections officers have repaid the County for the wage overpayments. A full restoration of the status quo ante would require that all wages and accrued leave collected by the County for the repayment of these overpayments be returned, plus interest. To best remedy this unusual situation, this order leaves it to the Union to determine whether it wishes to request a full restoration of the status quo ante and have the County return wages or accrued leave to the affected employees, knowing that the employees will remain liable for repayment of the wage overpayments. Regardless of whether the Union requests restoration of the status quo ante, the bargaining obligation over the repayment will be ongoing and will continue until an agreement or impasse is reached and an award is obtained through interest arbitration.”

Teamsters Local 839 v. Benton County, 2017 WL 5558495 (Wash. PERC 2017).