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What Employees Need to Know About Wage Deductions


According to California law, employees are entitled to all earnings except when an employer can lawfully deduct wages. It can be very upsetting to realize your employer deducted wages from your paycheck, so it’s important to understand what was taken from your paycheck and ascertain whether or not it should have happened.

Fortunately, an experienced employment law attorney can help you navigate this and other important employment law claims. With competent assistance on your side, you can fully investigate your employer’s actions and hold them accountable for wrongfully deducting wages.

Authorized Deductions Aren’t Common

There are actually very few reasons why an employer can deduct earnings from an employee’s paycheck, as outlined by the California Labor Code.

Accepted reasons for wage deductions in California include the following:

  • When required by state or federal law (typically in the form of tax withholdings)
  • When expressly authorized, in writing, by the employee to cover health insurance premiums, as well as medical or hospital dues
  • When a court order for wage garnishment arises
  • When there are deductions authorized by a collective bargaining agreement to cover (specifically) health and welfare or pension payments

As you can see, the normal circumstances under which an employer can deduct an employee’s wages are very limited. Though, there are other deductions an employer can make when an employee agrees to authorize them.

Other Deductions Employers Can Make

Some employers offer food and/or lodging for their employees. This can look like an on-site cafeteria or sleeping accommodations. If an employer chooses not to provide these free of cost to the employee, they can offer them in exchange for a deduction from the employee’s paycheck. Employees must always authorize these deductions in writing.

When employers provide accommodations, they must not charge arbitrary or unreasonable fees for these products and services. They must also not charge employees who do not benefit from them. Such charges could be considered unlawful rebates of earned wages and result in liability.

Can My Employer Charge Me for a Mistake I Made?

Sometimes employees make costly mistakes, but employers are not allowed to deduct wages under any circumstance.

If an employee carelessly leaves a set of tools out in the open, and someone steals the tools, the employee is not liable for this loss. This is known as ordinary negligence. While an employer may be free to reprimand the employee for their negligence, they are prohibited from deducting or withholding the employee’s earnings to cover the cost of the tools. The employer must absorb this cost.

When loss occurs due to an employee’s dishonesty, willful acts, or gross negligence, employers still can’t deduct their pay. Instead, employers must file a lawsuit against the employee and prove that their dishonesty, willful acts, or gross negligence caused the employer to incur a loss. This is the only means by which employers can take it upon themselves to pursue compensation for an employee’s negligent mistakes.

Can My Employer Deduct Pay for My Uniform or Equipment?

If your job requires you to wear a uniform or use special equipment, your employer can’t deduct the costs of these things from your earnings. Even if you fail to return these items, your employer can’t dock your final paycheck.

Can My Employer Deduct My Tips from My Earnings?

No. Employees who earn tips are entitled to collect any gratuity they receive in addition to their normal wages. Restaurant employers, however, may establish a tip pooling policy among employees who provide direct table service.

Can My Employer Deduct Earnings for an Overpayment?

No. Private employers who mistakenly overcompensate employees can’t deduct pay from the employee’s next paycheck to cover the overpayment without the employee’s consent.

If an employee refuses the payroll deduction, the employer becomes an ordinary creditor and must pursue debt collection through legal action.

Did Your Employer Take Your Wages?

If you believe your employer may have unlawfully deducted your earnings, immediately seek legal assistance. An experienced lawyer can help you fight to recover the compensation you should have earned in addition to any other applicable damages.

K2 Employment Law can help. Learn how by contacting us online and requesting a free initial consultation.