It is illegal for an employer to deduct a debt – such as a loan, advance or overpayment – from the salary earned by an employee. For example, the California Court of Appeals ruled that a public employer made an illegal deduction from employees` paychecks when it deducted an accidental overpayment from a previous payment period. The employees had a debt to the employer, but the employer was an ordinary creditor and therefore had to comply with the state foreclosure law, the court said. In response, California lawmakers passed a law that allowed the state to offset the debts of state employees, but did not extend that privilege to private employers. I, Sally Jones, understand that if my cash drawer is “short” for some reason, the payroll deduction to compensate for the shortage will be made from my paycheck for the payment period after the date of discovery of the deficit. f. Medical or physical examinations. An employer may not withhold or deduct an employee`s salary or require an employee or potential job applicant to pay for a medical or physical examination prior to recruitment as a condition of employment, or withhold or deduct an employee`s salary or require an employee to pay for a medical or physical examination; required by a federal or state law or regulation. or local ordinance. Article 222.5 of the Labour Code An employer may enter into an agreement to claim advances on wages, since advances are simply an advance payment of wages before they are earned. However, it is important to call the payment an advance and pick it up quickly. Wage advances to an employee or a third party at the employee`s request and the principal amount of loans granted by an employer to an employee are considered an “advance payment” of wages, and the repayment of these amounts is not a deduction from wages; Therefore, written approval of the refund is NOT required and there is no limit to the amount of reimbursement by the employee.
However, if an employer charges interest or accounting fees to an employee, a signed authorization from the employee must be obtained before a deduction can be made from the interest or expenses, and restrictions on minimum wage and/or overtime and half-hour pay apply. An error in good faith by the employer that results in an employee overpayment of wages is also considered an “advance payment” of wages and can be claimed on subsequent wages, regardless of deduction requirements. In other words, employer advances on payment, the principal amount of an employer loan, and bona fide overpayment errors by the employer do NOT require an employee`s written permission for the employer to withdraw these “initial payment amounts,” and there is NO minimum wage and/or overtime pay limit. Note: The Federal Act on Wages and Hours of Work does not recognize the promotion of statutory holidays as wages; Therefore, federal law considers the reimbursement of the undeserved leave advance as a deduction from wages in favour of the employer. Example: Each company gives John Smith a laptop on his first day of work. The company wants to make sure John returns the computer after it separates, but the “value” of the computer is difficult to predict based on depreciation, technological changes, etc. Therefore, the amount of the proposed deduction is unknown and the approval would say: The Court of Appeal also ruled that an employer cannot enforce an employee`s promissory note by deducting the outstanding balance from the employee`s last paycheque. Here too, the employer was considered a creditor who was not entitled to “self-help”. Recently, a U.S. District Court refused to confirm Costco`s agreement to deduct unpaid Costco credit card balances from employees` last salary. Example: John Smith was hired by Any Company on November 1, 2005.
John receives a $150 cell phone on the first day of employment, and he signs/dates a payroll deduction permit that states: Under California Labor Law, employers can make deductions from employees` wages if the deductions are: First, employers should know that an employer under Oklahoma law has a signed written agreement of the employee. so most payroll deductions are legal. Oklahoma law only allows deductions that are not required by law or a court order for the following purposes: This deduction permit is valid whether John Smith leaves the business after one month or five years of employment. The permit meets all the requirements of the applicable deduction provisions. It is signed before the deduction, it contains the reason for the deduction and it contains a certain amount in dollars. No additional notification to the employee is required before the deduction is made, and the employee cannot revoke the permit because the deduction is in favor of the employer. I, John Smith, received a $150 cell phone that I can use in conjunction with my work orders with any company. I understand that if I do not return the phone after I terminate my employment, $150 will be deducted from my last paycheque.
Employers who provide uniforms and equipment to employees should not make deductions from employees` final wages for the cost of unreturned items, as the California Division of Labor Standards Enforcement does not believe such deductions are allowed under state garnishment and employee retention laws. Inappropriate deductions can result in claims for insufficient payment, which can result in high penalties, including “wait time penalties” for insufficient payment of the final salary due at the time of termination. Therefore, California employers must ensure that they properly document payroll deductions and comply with the California Labor Code, Industrial Welfare Commission wage regulations, and case law. I, John Smith, received a laptop from Any Company to use in my job. I understand that if I do not return the laptop after the company separates, any company can deduct the value of the laptop from my last paycheck. The agreement may cover loans, advances, goods or services, as well as equipment or goods. The agreement must be in writing, enforceable and must not violate the law. a.
Tips. An employer may not collect, take or receive tips or any part thereof granted or left for an employee or deduct from the salary due to an employee on the basis of a bonus granted or left to an employee. However, Article 351 of the Labor Code A restaurant may have a policy that allows pooling/tipping between employees who provide direct table service to customers. The same general rule applies to payroll deductions and overtime pay. If the payroll deduction is in favour of the employer, it is not permitted if it reduces an employee`s overtime pay (i.e., the wage for work of more than 40 hours per work week) to less than an hour and a half. If an employee approves payroll deductions to purchase personal items such as food and beverages from an employee`s canteen, this appears to be a deduction for the employee`s benefit. Similarly, deductions for employee participation in a stock purchase plan are likely to be allowed for the same reason. Here are five key points employers should understand about payroll deductions in California.
An employer`s ability to deduct amounts from an employee`s wages due to a lack of money, breakage or loss of equipment is specifically regulated by industrial welfare board orders and limited by court decisions. .
