Unlawful Deduction Law
“It shall be unlawful for any employer to collect or receive from an employee any part of wages theretofore paid by said employer to said employee.”STATUTES
“It shall be unlawful for any employer to collect or receive from an employee any part of wages theretofore paid by said employer to said employee.”
“The provisions of Sections 221, 222 and 223 shall in no way make it unlawful for an employer to withhold or divert any portion of an employee’s wages when the employer is required or empowered so to do by state or federal law or when a deduction is 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 standard wage arrived at by collective bargaining or pursuant to wage agreement or statute, or when a deduction to cover health and welfare or pension plan contributions is expressly authorized by a collective bargaining or wage agreement.”
EXCEPTIONS
An employer can lawfully withhold amounts from an employee’s wages only under the following circumstances:
(1) when required or empowered to do so by state or federal law, or
(2) when a deduction is expressly authorized in writing by the employee to cover insurance premiums, benefit plan contributions or other deductions not amounting to a rebate on the employee’s wages, or
(3) when a deduction to cover health, welfare, or pension contributions is expressly authorized by a wage or collective bargaining agreement.
APPLICATION
The ability of an employer to deduct amounts from an employee’s wages due to a cash shortage, breakage, or loss of equipment is limited by court decisions. (Kerr’s Catering v. Department of Industrial Relations (1962) 57 Cal.2d 319).
In addition, there have been several court decisions that significantly restrict an employer’s ability to take an offset against an employee’s wages. Barnhill v. Sanders (1981) 125 Cal.App.3d 1, (Balloon payment on separation of employment to repay employee’s debt to employer is an unlawful deduction even where the employee authorized such payment in writing); CSEA v. State of California (1988) 198 Cal.App.3d 374 (Unlawful to deduct from current payroll for past salary advances that were in error); Hudgins v. Nieman Marcus (1995) 34 Cal.App.4th 1109 (Deductions for unidentified returns from commission sales unlawful.)
There is an exception to the foregoing contained in the Industrial Welfare Commission Wage Orders (DLSE only) that purports to provide the employer 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. What this means is that a deduction may be legal if the employer proves that the loss resulted from the employee’s dishonesty, willfulness, or grossly negligent act. Under this regulation, a simple accusation does not give the employer the right to make the deduction. 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. These IWC regulations may, in fact, not comply with the provisions of the California Labor Code and various California Court decisions.
PENALTY
If an employer has unlawfully deducted wages (withheld wages) at the time your employment ends, you may be eligible to collect penalties from the employer under Labor Code Section 203 (accruing at a day’s worth of wages for up to 30 consecutive days).
If you feel have been the victim of such employer behavior, contact Karakalos Law for a free and confidential consultation here.