Q: I have recently joined the work force and received my first paycheck. When I reviewed my paystub, I see all these deductions. What are allowable deductions and what are not?
A: A payroll deduction is essentially a subtraction of money from the employee’s paycheck so that the employee receives less than the promised compensation. In order to protect employees, the law regulates deductions. Employers must adhere to the following:
1) No deductions for uniforms. When an employer requires employees to wear uniforms (apparel and accessories of distinctive design and color) as a condition of employment, California law mandates that the employer must pay for and maintain these uniforms.
2) No deductions for lost tools. A deduction for loss of tools is allowed only if the employer can prove that the employee stole the tools or if there was “culpable negligence.” However, if the employee gave advance authorization, the employer may be able to deduct from the employee’s paycheck the cost of tools (and uniforms) furnished by the employer in the event such items are not returned.
3) No deduction for business losses caused by employee negligence. The law prohibits the employer from using an employee’s wages to shift the losses of the business to the employee. Unless the employee was dishonest or willfully or grossly negligent, losses due to simple negligence, such as cash shortages and breakage or loss of equipment should not be deducted.
4) No deduction for workers’ compensation costs. An employer is prohibited from directly or indirectly taking any deduction from an employee’s earnings to cover any part of the costs of worker’s compensation.
5) No right of offset for employee’s debts to employer. However, employee may authorize an employer in writing to withhold some amounts to pay a debt to the employer. If the employee is terminated before the entire debt is paid, the employer may not “accelerate” the balance but instead withhold from the final paycheck only the periodic amount due.
6) No chargebacks for commissions fully earned. A commission chargeback may be unlawful where the commission was fully earned at the time of a sale (that is, payment was not an advance on commissions) and the employee has not agreed in writing to the chargeback. However, an employee who receives both wages and sales commissions may agree in writing to a chargeback against commissions advanced by the employer if the sale did not proceed (for example, the customer returns the merchandise).
7) No taking back of wages earned and paid. It is unlawful for an employer to collect from an employee any part of the wages that had already been earned and paid to the employee. However, the employer may take back overpayment of wages that had not been earned.
If the employer is found to have unlawfully made these deductions, the employer is liable to the employee for the amount of the wages withheld, plus any waiting time penalties due. If an employee has doubts about the legality of a payroll deduction, it would not hurt to ask an experienced employment attorney for legal advice.
The Law Offices of C. Joe Sayas, Jr. welcomes inquiries about this topic. All inquiries are confidential and at no-cost. You can contact the office at (818) 291-0088 or visit www.joesayaslaw.com or our Facebook page Joe Sayas Law. [C. Joe Sayas, Jr., Esq. is an experienced trial attorney who has successfully recovered wages and other monetary damages for thousands of employees and consumers. He was named Top Labor & Employment Attorney in California by the Daily Journal, consistently selected as Super Lawyer by the Los Angeles Magazine, and is the recipient of PABA’s Community Champion Award for 2016.]
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