Did Your Employer Take Wrongful Deductions from Your Paycheck?

Posted on Friday November 18, 2022

California wage law protects employees against many types of wage theft, including wrongful deductions from a paycheck. Discuss your options for wage recovery with a California unpaid wages lawyer right away.

California law considers all wages that an employee earns to be their rightful property, so employers taking away those wages can constitute wage theft in many cases. To protect that property, the law only allows for very specific deductions to be taken straight from an employee’s pay by an employer. When an employer takes improper deductions, an employee might have a claim for underpayment and back wages.

If you believe that you have improper deductions on your paycheck that lower the wages you deserve, you should not wait to contact a California unpaid wages lawyer to discuss the best course of action.

The following is some information that employees should know about when it comes to deductions from their paychecks and whether they are lawful.

There are Very Limited Deductions Authorized

Without agreement from an employee, companies are not allowed to deduct from paychecks except in very limited circumstances. California law only allows the following deductions:

1. Those expressly permitted or required by federal or state law
2. Those expressly authorized by the employee for insurance premiums (authorization must be in writing)
3. Those expressly authorized by wage agreements or collective bargaining agreements to cover health or pension plan contributions
4. “Other” deductions not constituting rebates or deductions from minimum wage or agreed-upon wages

It is not surprising that this can be confusing for employees, and the language of the law can be difficult to decipher. Put simply, some permitted deductions include:

1. Tax withholdings
2. Company-sponsored plan contributions
3. Court-ordered garnishments

You Can Agree to Some Other Deductions

The law allows employees to authorize specific other deductions, but these can only be those that benefit the employee – not the employer. These might include deductions to cover purchases from the company cafeteria or other personal items from the company, purchases under a stock plan, and similar purposes.

Employers Cannot Deduct to Help Themselves

When employees make mistakes, it can sometimes cost employers money. However, California law prohibits employers from deducting such losses from employee paychecks. Instead, employers must be responsible for their own business losses and cannot try to recoup losses from their employees’ pay. Even if employees are grossly negligent or dishonest and cause losses, employers must take up the matter with legal action and not through deductions.

Employers also cannot take deductions as payment for employee debts, such as advances, loans, or overpayments. When the employer is a creditor, it has to follow the same procedures to garnish wages as other creditors and cannot help themselves to the employee’s pay.

Illegal Deductions from Employee Pay

Employees in the United States are protected by a number of laws when it comes to their pay. Among these laws are those that prohibit employers from making illegal deductions from their paychecks.

Unfortunately, many employers are unaware of these laws or choose to ignore them. As a result, employees can find themselves facing unfair deductions from their hard-earned income. While we know what an employer may deduct, it’s still helpful to find out more about illegal deductions.

What is an Illegal Deduction from Employee Pay?

An illegal deduction from employee pay is any unauthorized deduction from an employee’s wages. This can include deductions for things like damaged or lost equipment, shortages, cash register overages, or returned checks.

Illegal deductions also include any deductions that are not authorized by the employee, such as union dues or charitable contributions. In addition, any deductions that would take an employee’s wages below the minimum wage are also illegal.

Non-Allowable Deductions

There are a number of types of deductions that employers cannot make from an employee’s pay. These include, but are not limited to, deductions for:

• Expenses incurred by the employer (such as professional photos), or business expenses
• Costs of uniforms or other required equipment
• Gratuities or tips
• Required pre-employment medical exams
• Payment for damaged or lost property
• Time not actually worked (e.g., for breaks or lunch)

Exceptions to the Rule

Under 29 C.F.R. 541.602, deductions from the pay of exempt employees may be taken for disciplinary reasons. However, the deductions must be taken on a full-day basis. Moreover, the suspension must relate to a severe workplace violation concerning conduct. This may include negligent behavior in the workplace or a serious infraction, such as sexual harassment.

The Department of Labor will excuse disciplinary suspensions associated with poor attendance. Also,  the disciplinary deduction must relate to the company’s written policy – regarding all employees.

If an employer makes salary deductions of under a full week for disciplinary reasons or has a policy in place that creates the strong possibility of this type of deduction, an employee will not be exempt from the deduction. Auer v Robbins, 519 U.S. 452 (1997).

Some Examples of Illegal Employer Deductions

Below are some examples of illegal deductions from pay.

Business Expenses

Your employer, by law, must reimburse you for expenses you incur from performing your job. For instance, if you had to purchase the paper for printing a package your boss needed, he or she must reimburse you. You don’t have to pay for the costs out-of-pocket.

Tips or Gratuities

Neither can your employer take or receive tips or gratuities for any money a customer gives you as an employee. An employer cannot deduct that amount from the wages you receive. Restaurants can, however, pool tips or share the tips among employees who provide direct table services to patrons.

Therefore, your employer cannot compensate you for less than the minimum wage because you received tips. He or she also cannot take a portion of the tips for the restaurant. They cannot keep your tips either because they think they’ve met the minimum wage requirement.

Pre-employment Medical Exams

If you’re required to get a pre-employment medical exam, as required by federal or state law, your employer must pay for the test. They’re not allowed to deduct the cost from your pay or have you pay for the exam before or after it is taken.

Professional Photos

Your employer cannot ask that you have professional photos taken and tell you to pay for the cost, nor can they deduct it from your check.

Company Uniforms

If you’re required to wear a uniform on the job, your employer is required to pay for the clothing. He or she cannot deduct the cost of the apparel from your paycheck or require you to buy the uniform or accessories yourself. If you’re required to wear a navy blue polo and khaki pants, your employer–not you–is supposed to foot the bill.

A Further Overview of the Allowable Deductions

Again, employers can deduct garnishments, insurance costs, or authorized deductions from wage contracts or collective bargaining agreements, such as pension payments. If the state or federal government authorizes the deduction or the deduction is for legitimate business reasons, it is allowed. Legitimate business deductions include insurance premiums, taxes, and retirement contributions.

Also, if you okay the deduction from your payroll check, it is permitted. For example, if you sign up for a savings bond plan and authorize the deduction, the employer will deduct the amount and put it in a trust, so you can buy a bond.

If you believe your employer is making an illegal deduction from your payroll check, you may have the grounds to file a lawsuit. The Fair Labor Standards Act (FLSA) provides filers a statute of limitation of two years for non-willful violations, or a three-year statute of limitations for willful violations. This means that the U.S. Wage and Hour Division (WHD) will typically investigate the matter over a two-year period to determine if employees are owed additional wages.

Speak to an Experienced Employment Law Attorney to Get the Best Results

To ensure the best outcome, you need to speak to an attorney about your rights along these lines. If you cannot reach a resolution with your employer, you should file a claim with the U.S. Department of Labor’s Wage and Hour Division. When you file the claim, you’ll need to include the following details:

• Your contact details – name, address, and phone number
• Your employer’s contact details
• A full description of the problem
• The dates of the incident
• The amount of the deduction
• Other relevant details

If you retain the services of an experienced employment law attorney, they can go over your case to make sure that it can be reviewed to your satisfaction without delay.

Contact Our California Unpaid Wages Lawyers Right Away

As you can see, the law regarding pay deductions favors the employees in California, but this does not stop many employers from trying to get away with improper deductions that deprive employees of their rightful pay. If you think you might have a claim due to unfair deductions, contact a California unpaid wages attorney at Mara Law Firm. Call (619) 234-2833 or contact us online to learn about your rights and how we can help you.