Select Benefit Overpayment Services. You will have to pay a 30 percent penalty in addition to the overpayment amount.You may also be disqualified for future benefits for up to 23 weeks. You have been sent a Notice of Action letter that advised you of reason for the overpayment and the amount you were overpaid. The law does allow for an employee to voluntarily agree to repayment of any overpaid wages as long as the employee's wages are not reduced below minimum wage. California Labor Code 221 is a short part of California's labor code that simply states employers may not take wages they have paid their employees back. Establish Installment Agreements (Notices of Overpayment and Benefit Overpayment Collection Notices) and apply for overpayment waivers. Best practice in my opinion is to void the overpaid paycheck and reissue corrected amount in your payroll system.