Think Twice Before Deducting An Employee's Pay
Diane Pfadenhauer, over at Strategic HR Lawyer, has a great post reminding employers to think twice about deducting business costs from an employee’s pay check. In her post, she refers employers to review the U.S. Department of Labor’s opinion letter regarding these types of deductions. Click here to read her post.
In California, state courts have clearly held that employers cannot legally deduct costs that result from simple employee negligence, such as shortages and other losses occurring without the fault on the part of the employee. Business must simply write these losses off as business expenses. However, businesses may deduct an employee’s wages for losses that resulted from a dishonest or willful act or through the gross negligence of the employee. The California Division of Labor Standards and Enforcement’s (DLSE) explanation of what types of deductions are permissible under California law can be found here.
In California, state courts have clearly held that employers cannot legally deduct costs that result from simple employee negligence, such as shortages and other losses occurring without the fault on the part of the employee. Business must simply write these losses off as business expenses. However, businesses may deduct an employee’s wages for losses that resulted from a dishonest or willful act or through the gross negligence of the employee. The California Division of Labor Standards and Enforcement’s (DLSE) explanation of what types of deductions are permissible under California law can be found here.
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