In California, an employer can lawfully withhold portions of an employee’s wages under various circumstances, such as:
- when required or empowered to do so by state or federal law
- when a deduction is 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)
- when a deduction to cover health, welfare, or pension contributions is expressly authorized by a wage or collective bargaining agreement (California Labor Code Sections 221 and 224).
An employer cannot discharge an employee because garnishment of wages has been threatened or if the employee’s wages have been subjected to garnishment for the payment of one judgment. (California Labor Code Section 2929[a][b])
Some of the more common, and often unlawful, payroll deductions include the following:
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. (California Labor Code Section 351) However, establishments such as restaurants may require tip “pooling” or tip sharing among employees who provide direct table service to customers.
If an employer requires a photograph of an applicant or employee, the employer must usually pay the cost of the photograph. (California Labor Code Section 401)
If an employer requires a bond of an applicant or employee, the employer must usually pay the cost of the bond. (California Labor Code Section 401)
If an employer requires that an employee wear a “uniform,” the employer must usually pay the cost of the uniform. (California Labor Code Section 2802; Industrial Welfare Commission Orders, Section 9) The term “uniform” includes wearing apparel and accessories of distinctive design and color. The employer may also be required to “maintain” that uniform.
An employee is entitled to reimbursement by his or her employer for all expenses or losses incurred in the direct consequence of the discharge of the employee’s work duties. (California Labor Code Section 2802)
Medical or Physical Examinations
Generally speaking, 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 physical or medical 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. (California Labor Code Section 222.5)
Not usually. Your employer may not make deductions from your wages for simple mistakes/accidents, cash shortages, unintentionally breakages, or other losses of company property or equipment. Penalizing employees for acts of simple negligence has been found inappropriate since employers, not employees, bear the cost of doing business and such losses are a normal part of doing business. If you accidentally drop a tray of dishes, take a bad check, or have a customer walkout without paying a check, your wages should not be deducted as a result.
Although your wages cannot be deducted under these circumstances, your employer can still penalize you through suspension and/or termination, depending on company policy and/or the terms of your employment relationship.
As you might expect, if a loss to the company is the result of an employee’s dishonesty, willful destruction or gross negligence, the employee can be required to compensate the employer for it. In these situations, the employer must be able to prove that the loss resulted from the employee’s dishonesty, willfulness, or grossly-negligent act.
If you have a valid arrangement to repay a loan to your employer, you are normally obligated to pay it back. However, if you are making installment repayments to your employer and an outstanding balance on that loan exists at the time of your termination, your employer can only collect the amount of the installment payment due from your final wages that would have been due absent the termination (i.e., your employer cannot increase the amount of this final payment on the loan due to your separation from the company).
Keep in mind, however, that your obligation to repay some types of loans (e.g., a Promissory note) may survive the severance of your employment.
If you are an hourly employee, you are usually entitled to get paid only for time you actually work, although some situations exist where you are entitled to wages if you merely “show up” to work (and are, thereafter, sent home early due to a lack of work). If you are an exempt employee, the law is more complicated than can be summarized here, so call us with questions.
Note also that California Labor Code Section 2928 says that a deduction of 30 minutes can be made where an hourly employee shows up less than 30 minutes late. Talk to us about how this rule may be reconciled with the rules guaranteeing full payment for all hours worked.
These questions and answers are for educational purposes only and cover just a few topics that are commonly of interest to workers. This material should not be construed as legal advice, the establishment of an attorney-client relationship, or as indicative of a particular outcome regarding any legal issue you might have.