EMPLOYER UNLAWFUL DEDUCTIONS
Under California law, an employer may lawfully deduct the following from an employee’s wages:
- Required By Law: Deductions that are required of the employer to deduct by federal or state law, such as income taxes or garnishments.
- Expressly Authorized: Deductions expressly authorized in writing by the employee to cover insurance premiums, hospital or medical dues or other deductions not amounting to a rebate or deduction from the wage paid to the employee.
- Loss caused by the employee’s a dishonest or willful act: Employer has the right to deduct from an employee’s wages for any cash shortage, breakage or loss of equipment if the employer can show that the shortage, breakage or loss is caused by a dishonest or willful act, or by the employee’s gross negligence.
- Shortage in cash register: Employer may subject the employee to disciplinary action, up to and including termination of employment if the employee experience shortage in cash register. Additionally, employer can bring an action in court to try to recover any damages and/or losses it has suffered
- Coming to work late: Employer can deduct money from the employee’s paycheck for coming to work late. The deduction shall not, however, exceed the proportionate wage that would have been earned during the time actually lost.
- Deductions authorized by a collective bargaining or wage agreement, specifically to cover health and welfare or pension payments.
UNLAWFUL DEDUCTIONS BY EMPLOYER:
- Accidental Loss: Employer cannot legally deduct from the employee’s wages if during the employee performing his/her job and by reason of mistake or accident a cash shortage, breakage, or loss of company property/equipment occurs. The California courts have held that losses occurring without any fault on the part of the employee or that are merely the result of simple negligence are inevitable in almost any business operation and thus, the employer must bear such losses as a cost of doing business.
- Loans: Employer is permitted to deduct for the periodic installment payments on a loan made to an employee by the employer, when it is authorized in writing by the employee,
- Loan Balloon Payment: Barnhill v. Sanders (1981) 125 Cal.App.3d 1, court concluded that the balloon (lump sum) payment of the outstanding balance to be made at the time the employment relationship ends is not allowed notwithstanding the fact the employee has given his or her written consent to such a payment. When the employment relationship ends, employer can only deduct the amount of one installment payment from your final paycheck.
- Gratuities: An employer cannot collect, take, or receive any gratuity or part thereof given or left for an employee, or deduct any amount from wages due an employee on account of a gratuity given or left for an employee. However, a restaurant may have a policy allowing for tip pooling/sharing among employees who provide direct table service to customers.
- Photographs: If a photograph is required by an applicant or employee, the employer must pay the cost of the photograph.
- Bond: If bond is required by an applicant or employee, the employer must pay the cost of the bond.
- Uniforms: If uniforms are required by employer, the employer must pay the cost of the uniform.
- Business Expenses: An employee is entitled to be reimbursed by his or her employer for all expenses or losses incurred in the direct consequence of the discharge of the employee’s work duties’
- Medical or Physical Examinations: An employer may not withhold or deduct from the wages of any employee or require any prospective employee or applicant for employment to pay for any pre-employment medical or physical examination taken as a condition of employment, nor may an employer withhold or deduct from the wages of any employee, or require any employee to pay for any medical or physical examination required by any federal or state law or regulation, or local ordinance.
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