Improper Wage Deductions in California: What Employers and Employees Need to Know

Wage deductions are a crucial aspect of payroll, but improper wage deductions in California can lead to legal trouble for employers. California has strict wage and hour laws that regulate what employers can and cannot deduct from an employee’s wages. Understanding these regulations is essential for employers to ensure compliance and avoid penalties, and for employees to ensure they are getting paid appropriately. If you are an employee or a small business owner in Ventura County, contact Rounds & Sutter, LLP for help from a knowledgeable and experienced Oxnard wage and hour employment lawyer.

What Are Wage Deductions?

Wage deductions refer to the amounts subtracted from an employee’s paycheck, either voluntarily or as required by law. While certain deductions are permitted, such as those related to taxes, health insurance, or retirement contributions, other deductions may be prohibited under California law. Unlawful deductions can lead to wage theft claims, which can result in legal liability for employers.

Types of Permissible Deductions

California law allows specific deductions from an employee’s paycheck. These include:

1. Tax Withholdings: Deductions for federal and state income taxes, Social Security, Medicare, and other mandatory government withholdings are required.

2. Employee Benefits: Deductions for health insurance premiums, retirement contributions, or other employee benefit programs are allowed, provided the employee has authorized these deductions in writing.

3. Court-Ordered Deductions: Wage garnishments ordered by a court, such as for child support or other debts, may be imposed.

4. Voluntary Deductions: If the employee consents in writing, deductions for charitable contributions, union dues, or repayment of loans advanced by the employer are permitted.

Prohibited Wage Deductions

Apart from the allowances for specific deductions, California law is very strict about what cannot be deducted from wages. Some common examples of improper wage deductions include:

1. Damage to Company Property: An employer cannot deduct the cost of repairing or replacing damaged or lost company property from an employee’s wages unless the employee’s actions were proven to be intentional or grossly negligent.

2. Cash Register Shortages: Employers may not deduct from wages to cover cash register shortages, especially if multiple employees have access to the register. This practice is illegal under California labor laws, as it unfairly shifts business losses to employees.

3. Uniform Costs: Employers are responsible for providing and maintaining any required uniforms. Deductions for the cost of uniforms, or their cleaning and maintenance, are prohibited unless the employee gives voluntary consent.

4. Business Expenses: Employers cannot deduct costs related to business expenses, such as tools, equipment, or travel expenses, unless there is a voluntary, written agreement with the employee. Under California law, these expenses are the responsibility of the employer.

5. Costs of Customer Theft: If a business suffers a loss due to a customer stealing goods or services, the employer cannot pass this loss on to the employee by deducting it from their wages.

Penalties for Improper Deductions

If an employer in California makes improper wage deductions, they may be held liable for wage theft. Employees who have been subject to unlawful deductions have the right to recover the full amount of the deduction, along with potential penalties. In some cases, employers may also face civil lawsuits, fines, and additional penalties imposed by the California Labor Commissioner.

For example, if an employee is underpaid due to improper deductions, the employer could be required to pay back wages and interest, along with fines. These penalties can add up quickly, making it imperative for employers to comply with wage deduction laws. If wages are improperly deducted from an employee’s final paycheck, the employer might be subject to a waiting time penalty related to the improper deduction.

Protecting Your Rights as an Employee

If you believe your employer has made an improper wage deduction from your paycheck, it’s important to take action. Under California labor laws, employees have several options for recovering their lost wages:

1. Request Documentation: You can request detailed documentation from your employer that shows how your wages are calculated and what deductions have been made.

2. File a Complaint: You can file a complaint with the California Division of Labor Standards Enforcement (DLSE), which investigates wage theft claims. The DLSE has the authority to conduct investigations and enforce penalties for improper wage deductions.

3. Consult an Employment Attorney: In cases of significant wage theft or repeated violations, consulting an employment attorney can help protect your rights. An attorney can assist you in filing a claim, recovering unpaid wages, and pursuing additional compensation as appropriate.

Tips for Employers to Avoid Liability

Small business owners in Ventura County, even those with just a few employees, must ensure they follow California’s wage deduction laws carefully. Here are some tips to avoid liability:

1. Know the Laws: Familiarize yourself with California labor laws regarding wage deductions and consult with a legal professional for guidance and advice.

2. Keep Accurate Records: Maintain clear and detailed records of all employee wages, hours worked, and any deductions. This transparency can help avoid disputes.

3. Obtain Written Consent: For any voluntary deductions, ensure the employee provides written consent. Without proper documentation, even voluntary deductions may be deemed improper.

4. Consult with Legal Counsel: If you are unsure whether a specific deduction is permissible, seek legal advice from an employment law attorney to avoid potential legal violations.

Contact Rounds & Sutter, LLP for Help With Employment Law Matters in Ventura County

Improper wage deductions can lead to serious consequences for both employees and employers in California. Employees have the right to protect their wages from unlawful deductions, while employers must take care to comply with state laws to avoid legal liability. For employees facing improper deductions or small business owners needing guidance on wage laws, consulting with an experienced employment law attorney can help ensure your rights and obligations are properly addressed.

Whether you are an employee seeking to recover unpaid wages or a business owner striving to remain compliant, understanding California’s wage deduction laws is crucial. Contact Rounds & Sutter, LLP in Oxnard today at 805-650-7100 for a free consultation regarding your concerns.