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CA: Employer miscalculated PTO- over 4 years California

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  • CA: Employer miscalculated PTO- over 4 years California

    My wife is a physical therapist at a small private practice. Her employer included her PTO on the pay stubs. Using those numbers, she took her vacation time accordingly, no more, no less.
    The employer discovered that the PTO numbers were incorrectly calculated by their accounting contractors. He then went back four years to recalculate the PTO, deducted it from the current correctly calculated amounts.
    Results are that my wife now has no PTO for this year.
    PTO is no longer posted on pay stubs, and is now the "responsibility" of the employees.

    My questions are:
    1. Can the employee be held responsible for PTO that was clearly miscalculated by the accounting contractor or the employer ?
    2. Is there a statute of limitations on the time frame for this reconciliation ?
    3. Is there any sort of precident that can be referenced in a case like this?

    I have reviewed the post here, found some related topics, but nothing exactly on point.

  • #2
    This is maybe complicated.
    - There is a generic CA-specific rule that employers cannot directly recover wage overpayments via what CA-DLSE calls "self help" remedies.
    - There is another more specific rule that in CA vacation once earned cannot be forfeited.
    - Now we get to the HOWEVERs. There is no rule in CA (or anywhere else) that employers cannot change the accrual rate on a go forward basis. Past that vacation "earned" is vested but if the employer is correctly claiming to be just fixing a mistake, there is a good possibility that CA-DLSE would play along. Subjec to the rule against self help recoveries.
    - There is no "finders keepers" rule. Lets say that the employer overpaid the salary. Not the employer changing their mind but an actual mistake. The "self help" rule would prevent a direct recovery but would not prevent the employer from going to court. That is for a normal wage payments. Vacation "earned" is in no stronger position then wages paid legally.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)


    • #3
      Help to define "self help"

      If I understand it correctly, a "self help" remedy is where the employer takes unilateral action to make policy or correct some action. Where does the legal issue with that come into play?

      And if I understand your post, PTO is vacation time, which is vested for the employee. Going forward, the employer can make all the corrections he needs to. But in this case he went back four years to collect the PTO time that was miscalculated, and then docked this year's vacation time with the overage. (Not all of the miscalculated PTO was used at the time of the reconciliation.)

      Your thoughts appreciated.


      • #4
        The following cite is from the CA-DLSE manual. It is a generic rule effecting recovery of all wage payments and is not specific to vacation/PTO. This is talking about employers taking deductions, not about court actions.

        Section 221 Prevents Employer From Recovering Wages Paid To Employee. By enacting section 2 21, and retaining it as interpreted by the courts and the IWC, the Legislature has prohibited employers from using self-help to take back any part of “wages theretofore paid” to the employee, except in narrowly-defined circumstances provided by statute. This is consistent with the ruling in the case of CSEA v. State of California(1988) 198 Cal.App.3d 374; 243 Cal.Rptr. 60 2, which held that absent a contrary provision in the law, the attachment and garnishment laws in California prohibit an employer from recovering any wages previously paid to the employee.
        Vacation/PTO is a little complicated in CA. On the one hand, vacation/PTO already earned is vested (just like wages). On the other hand, it the vacation/PTO was over accrued, the "self help" rule limits the recovery of actual overpayments via deductions (just like wages). it does not necessarily limit the reduction of the unpaid balance or altering future accruals. One more time. There is no "finders keepers" rule. If wages are overpaid or vacationPTO is over accrued, the employer has legal recourse. Just not self help remedies.
        "Reality is that which, when you stop believing in it, doesn't go away".
        Philip K. **** (1928-1982)


        • #5
          Thank you for your time

          Thank you. I can see that more information is needed re: the accounting of PTO, how much future and how much past time was calculated. I am smarter today than yesterday.


          • #6
            Originally posted by Mth View Post
            I am smarter today than yesterday.
            Never a bad thing.

            Do not assume that employer is wrong, but also do not assume that they are right. If they made one mistake there is no certainty that they have not made another. Politely talk to payroll and ask for a copy of the revised balance calculation. Politely talk to HR and ask for a copy of the vacation/PTO policy and remember any changes on a go forward basis that do not involve forfeiting vacation/PTO that were properly recorded are likely legal. I was at one CA employer where some employees correctly complained about illegal forfeiture. The employer's response was "fine, we will reduce all accruals on a go forward basis for all employees to pay for the change you will not let us make". Which was legal and cost the employees a lot more then the first set of changes would have. What many employees (and employers) fail to reallize is that are often legal methods of accomplish what many employers tired to do with illegal methods.

            It is a good thing to be very sure of you facts (and the law) prior to rocking any boats.
            Last edited by DAW; 06-22-2012, 08:11 AM.
            "Reality is that which, when you stop believing in it, doesn't go away".
            Philip K. **** (1928-1982)


            • #7

              Under no circumstances should YOU talk to Payroll, HR, or anyone else. YOUR WIFE is the one who needs to do this. No one related to her employment has any legal obligation to talk to you and it sometimes makes things worse when spouses get involved.

              By all means collect information for her and be as supportive as you like, but when it comes to actually sitting down with the employer, you stay out of it and let your wife do the talking.
              The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.


              • #8
                Agreed. .......
                "Reality is that which, when you stop believing in it, doesn't go away".
                Philip K. **** (1928-1982)


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