BILL NUMBER: AB 1753INTRODUCED BILL TEXT INTRODUCED BY Assembly Member Obernolte FEBRUARY 2, 2016 An act to amend Section 19838 of the Government Code, relating to state employees. LEGISLATIVE COUNSEL'S DIGEST AB 1753, as introduced, Obernolte. State employees: overpayment. Existing law authorizes the state to recoup employee overpayments through methods mutually agreed to by the employee and the state, as specified, and provides the state, when an employee separates from employment prior to full repayment, with the right to exercise all legal means to recover the additional amount owed. Existing law prohibits the state from taking administrative action to recover an overpayment unless the action is initiated within 3 years from the overpayment. This bill would require the administrative action for overpayment to be initiated by written notice to the employee and would instead prohibit the state from taking that action unless the action is initiated within 3 years from either the date the employee separates from state service or, when the state alleges that the employee obtained the overpayment as a result of fraud, embezzlement, or falsification, the date the state discovers the fraud, embezzlement, or falsification, whichever is later. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 19838 of the Government Code is amended to read: 19838. (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) No administrative action shall be taken by the state pursuant to this section to recover an overpayment unless the action is initiated by written notice to the employee within three years fromthe date of overpayment.either of the following, whichever is later: (1) The date the employee separates from state service. (2) When the state alleges that the employee obtained the overpayment as a result of fraud, embezzlement, or falsification, the date the state discovers the fraud, embezzlement, or falsification. (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.