Recouping Overpayments or Equipment Costs

Districts need to consider several factors before withholding an employee’s pay to recoup overpayments of wages or costs for lost or damaged equipment.

Wage Overpayments

Deducting from wages after an overpayment is permissible if an employee has agreed to a deduction for overpayment in writing. A district that mistakenly pays money to an educator may generally recover that money, even if the district was negligent and the employee innocent unless it would be inequitable to require repayment.

Paragraph 6.5 in the TASB model contract serves as such an agreement during the term of the contract.

Overpayments. You agree that you are not entitled to any fund the District overpays you and you further agree that the District may deduct any overpayments under this Contract from one or more of your paychecks.

TASB Legal Services recommends that a district attempt to reach an agreement with the employee as to a repayment plan before deducting overpayment from wages. This will help avoid imposing a hardship on the employee by withholding a large amount from one paycheck.

Missing or Damaged Equipment

A board may not require an employee who acts in good faith to pay for a textbook, electronic textbook, or technological equipment that is damaged, stolen, misplaced, or not returned. A district may enter into a written agreement with an employee whereby the employee assumes financial responsibility for electronic textbook or technological equipment usage off school property or outside of a school-sponsored event in consideration for the ability of the employee to use the textbook or equipment for personal business. The written agreement must be separate from the employee’s employment contract. In addition, the agreement must clearly inform the employee of the amount of financial responsibility and advise the employee to consider obtaining appropriate insurance. An employee may not be required to agree to such an agreement as a condition of employment (Texas Education Code (TEC) §31.104(e)).

Optional language for this purpose is available at TASB Policy CQ(EXHIBIT), Employment Agreement for Acceptable Use of the District’s Technology Resources in the Regulations Resource Manual maintained by TASB Policy Service (member login required). A district that wishes to enter into such an agreement with one or more of its employees should consult its school attorney.

Provisions of the Fair Labor Standards Act (FLSA) also make it impermissible to deduct the cost of equipment from an employee’s pay. U.S. Department of Labor (DOL) opinion letter FLSA2006-7 warns that deductions from the pay of an exempt employee other than a teacher to cover the cost of lost or damaged equipment would violate the salary basis rule and are not permitted. There are no exceptions related to unreturned equipment. Furthermore, the FLSA doesn’t allow deductions to reduce a nonexempt employee’s pay below minimum wage, unless the deduction is for the employee’s benefit (e.g., an insurance premium contribution).

The FLSA also dictates that wages are due on the next regular payday for the covered pay period but doesn’t specify how the pay be disbursed. If an employee doesn’t return equipment, keys, or employer issued uniforms upon termination, it is permissible to require the employee to come to central office to pick up the final paycheck. This often serves as an incentive to return the property. If the property is not returned, it is recommended to invoice the employee and require payment via accounts receivable rather than payroll deductions. Future employment with the district may also be contingent on settling all outstanding payments.