I have an employee who is constantly breaking things and routinely arrives late. Can I deduct the cost of the products from his wages? Can I deduct anything for being tardy?
You can’t typically deduct wages when employees break merchandise, but it depends on how the products are being broken. If an employee accidentally breaks something by no fault of their own, you cannot deduct that loss from their wages. Accidents happen in every business, and you are responsible for those losses as a business expense.
The general rule is that you can’t withhold wages or require an employee to reimburse you for cash shortages, breakages, or loss of equipment, unless the loss was caused by the employee’s willful act, dishonesty or gross negligence.
This rule applies in situations in which an employee accidentally drops something and it breaks, or if a customer walks out without paying their check. It would not apply if an employee intentionally threw a glass at a wall, for example, or took money from the register and lied about it.
Gross negligence occurs when an employee’s conduct falls far outside of the ordinary, to the point where they demonstrate a conscious indifference to the consequences of their actions. Courts, not employers, determine whether conduct rises to the level of gross negligence.
It’s challenging to differentiate simple negligence from gross negligence. Not paying attention while driving might be simple negligence, but at what point does it become gross negligence? If you’re driving over the speed limit? If you’re intoxicated? Blindfolded?
You can’t simply accuse an employee of being dishonest or negligent and then withhold wages. Actually, I wouldn’t recommend withholding wages for dishonesty or negligence without speaking to an employment lawyer.
California Labor Code Section 224 prohibits wage deductions that are not authorized by the employee in writing or allowed by law. Wage withholding is extremely risky. If you’re later found to be incorrect, your employee could recover the withheld wages plus waiting time penalties.
Employers can really only reduce wages when required by law, such as for income taxes or wage garnishments or with the employee’s written consent, such as deductions for insurance premiums or retirement contributions.
You may be able to deduct money from your employee’s paycheck for coming in late to work. The amount that you deduct cannot be more than the amount of wages they would have earned during the amount of time they were absent, except that if the loss of time is less than 30 minutes, you can deduct up to half an hour of wages.
Mary Luros is a business law attorney with Hudson & Luros, LLP, in Napa, and can be reached email@example.com or 418-5118. The information provided here is not intended as legal advice, nor does it form an attorney-client relationship with the author. The author makes no representations as to the reliability or accuracy of the above information. In a perfect world we wouldn’t need disclaimers — or attorneys.