The law has specific guidelines when employers can withhold employees’ wages. First, the employer can impose deductions on an employee’s wages when he is allowed by the state or federal law. The second option where the employer can have deductions is where the employee expressly directs the employer to do so in writing.

The reasons behind the employee allowing the deductions can be to cater for insurance premiums, contribution to other deductions among other reasons. The third reason why the employee can request for deduction is when the employer deducts the wages in order to cover for health and welfare reasons.

The ability of the employer to deduct employees’ wages based on breakages or loss of equipment is clearly regulated in law.

Some of the unlawful deductions which can be made by an employer include the following:

Gratuities

An employer cannot receive gratuity under the law. If the employer is deducting from you, then you can sue them for violation of the law.

Photographs

If the employer will require your photography in the workplace, you are not the one to pay for the photograph. The law in labor code section 401 prohibits such deductions.

Bond
If the employer will require a bond of an employee, then the employer will be required to pay for the costs related to the bond under Labor Code Section 401.

Uniforms

If an employer will require the employee to wear uniforms, then the employer should pay for the uniforms. It is stipulated under Labor Code Section 2802. The term uniforms can refer to wearing apparel of distinctive color.

Business Expenses

If an employee incurs expenses, then he is entitled to a full refund by the employer. The Labor Code Section 2802 stipulates all the expenses the employee can be reimbursed.

Medical or Physical Examinations

The employer is not allowed to withhold any salary or wages of an employee due to fees arising due to pre-employment examinations. The Labor Code Section 222.5 states clearly the rights of employees and employers in regard to the examination carried out before employment begins.

FAQ’s About Deductions in the Workplace

Is an employer allowed to make deduction by law?

Yes, the law allows the employer to deduct your salary under your personal or the federal law provisions.

Can an employer pay for breakables?

No, the law in the state of California leaves the breakages under the employer to cater for them. It is assumed that the breakables are among other losses are inevitable in a business operation hence the employer should plan for them.

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Under the California labor law, an employer can lawfully withhold deductions from his employee’s wages only in cases required by federal or state law. This is true when it was authorized by the employee in writing an order to cover benefit plan contributions, insurance premiums, or any other deductions.
Authorized Deductions

Authorized deductions are not a rebate of the wage of the employee. Other situation when an employer can withhold wages from his employee’s is when this amount is covering welfare, health, or pension contributions that are authorized expressly by a collective bargaining or wage agreement.
What is Section 224?
The section 224 of the labor code stipulates that it is legal to make deductions from wages in certain situations. However, employers are not allowed to fire employees for the reason that their wages are the subject of a withholding for judgment fees.

It is specifically regulated that the employer’s ability to withhold amounts form his employee’s wages due to loss of equipment, breakage or cash shortage. This ability is also limited by decisions of the court. Several court decisions have restricted significantly the employer’s ability to collect deductions from his employee’s wages.

Among the common payroll deductions that are unlawful in California but still often made by employers are:

• Gratuities – employers cannot deduct any amount for wages due to an employee on account of gratuities left or given to an employee nor can they take, collect, or receive any gratuity left or given to an employee. However, many restaurants have a policy allowing for tip sharing or pooling among employees who directly service customers.

• Photographs – in the case that an employer asks for a photo of an employee or applicant, the costs of the photograph must be covered by the employer.

• Bonds – employers that require a bond of an employee or applicant should pay the bond’s cost.

• Uniforms – if the employee is required by an employer to wear a uniform, the employer is the one to pay the uniform’s cost.

• Business expenses – employees are entitled to reimbursement for their expenses or losses caused by the discharge or their work duties.

• Physical or medical examinations – employers are not allowed to deduct or withhold from employees’ wages for any pre-employment physical or medical examination required as a condition of employment or by any local ordinance, as well as any state or federal regulation or law.

An employer can deduct lawfully from his employee’s wages under California law if:

• It’s required by state or federal regulations or laws such as income garnishments or taxes.

• It’s authorized expressly by the employee (in writing) to cover medical or hospital dues, insurance premiums.

• It’s authorized by a collective wage or bargaining agreement for covering welfare and health or pension payments.

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How time flies! The holidays are looming and that means year end and too soon TAX TIME! Most 1099 contractors are well versed and ready to add up their deductions, but what about employees? Are there any deductions you should be aware of? The answer is YES! You need to keep an eye on your employer’s deductions from your paycheck.

Certainly, your employer not only has the right to, but is required by law to make some deductions from your check, including income taxes and social security. The problem comes when an employer oversteps this mandate and tries to deduct items not allowed by the labor code. This amounts to stealing from their employees and trying to pass along their cost of doing business to the employee.  At United Employees Law Group we fight for employees who have been cheated.

Here I have a few of the most common unlawful deductions employers tend to make.  Time to check your paycheck.

Deductions ALLOWED by CA Law:

The following are the legal monies your company can and should deduct from your check:

-Money required by the government, either State or Federal, including income taxes.

-Money previously approved and agreed to IN WRITING, which may contribute to health coverage, retirement accounts, or return of a draw on wages. The labor code dictates how much can be deducted from any one check, and the exact amounts and dates must be in writing and agreed to ahead of time.

-Deductions pertaining to insurance, welfare or pension contributions for members of a union, or those employees included in a collective bargaining agreement.

Deductions NOT ALLOWED by law:

Outside of the above mentioned items, it is not legal for your employer to deduct any of the below items from your check:

-Tips which were paid to you by a customer. When there is a well defined, existing policy for pooling tips, this may be done. Any other money left for an employee by a patron is exactly that, and the company is entitled to NO PART of it. The company cannot deduct tips from your hourly wage  claiming it is part of your minimum wage.

-Any photographs required by your company for any reason, whether while you are employed or in order to be hired, must be paid for by the company.

-If you’re an employee and not a contractor, and your employer requires an insurance policy or bond for your employ, such a policy is the responsibility of the employer to purchase and maintain.

– Uniforms are one of the most contested on this list. There are arguments back and forth as to what exactly is considered a uniform. Regardless, the letter of the law dictates that the employer must pay for a uniform which is required for work. For some employees this can be a very big investment and is worth the fight.

-Your employer is required to cover ALL costs of doing business. If you are an employee and not a contractor, you cannot be asked to pay for any expenses out of your pocket. You must be reimbursed for any and all monies you pay out in order to perform your job or help anyone else complete theirs. This may include food for staff or clients, part or all of a cell phone or internet bill, mileage and gas for travel required by your job, not inclusive of a regular commute unless you work off site and go directly to a job site from your home.  The company you work for is the entity who has the right to write off the expenses, therefore they must actually PAY THEM.

-Any type of health screening, drug testing, TB tests, or physical which your company requires, they must pay for; the cost of this cannot be passed on to the employee.

If you have had these or similar deductions made that you believe to be unlawful, you must act quickly to secure your rights. You have only four years in California to pursue the reimbursement of such monies. When you contact UELG we will carefully examine your situation and determine just what type of claim or claims you may have. In many cases we see that unscrupulous employers tend to cut corners in more than one area.

My team is waiting to answer your questions; whether the problem is with a past or current employer, we will handle your case with care and confidentiality, and we always work for free until we collect for you.

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Most employees know that the federal law mandates deductions from his or her paycheck for Social Security and federal income tax. The employee must authorize other deductions except when a deduction is required to comply with a court judgment such as wage garnishments or child support payments. The IRS can also garnishee wages to collect back taxes. An employer may deduct money for items that an employee has voluntarily authorized in writing such as union dues, insurance premiums, and charitable contribution.

Some deductions are illegal, and some of the frequent unlawful deductions made by employers include:

-Employee gratuities given for service to the public cannot be taken by the employer from the employee’s wages.

-Cost of employee photographs that are required by the employer.

-The cost for a bond of an employee must be paid by the employer.

-The employer must pay for the costs of uniforms that the employee is required to wear. This includes wearing apparel with a distinctive design or color.

-Medical exams required as a condition of employment or while employed must be paid for by the employer. This also covers exams required by federal or state law or regulation, or by a local ordinance.

-The cost of meals cannot be deducted from an employee’s pay check if they do not want to eat the food.

-An employer cannot legally deduct money from an employee’s pay check to cover the loss of company property, breakage, or shortages even if these are the result of simple negligence. California courts have held that these problems are just the cost of doing business. This means that the employee does not have to pay for accidents or when a customer leaves without paying their check.

-However, if the employer can show that a loss of any type is caused by a willful or dishonest act or by gross negligence on the part of the employee, then the employer may have the right to deduct the loss. It should be noted that the employer cannot wantonly charge or assume that the employee’s actions were so grievous as to meet this standard.

If an employee believes that illegal deductions have been made from their wages, then they can file a complaint with the Labor Commissioner’s Office. The complaint should include all of the relevant facts and pertinent information. The complaint will be assigned to a Deputy Labor Commissioner who will review the file and arrange a conference or a hearing. Dismissal of the complaint is also a possibility. If this occurs, then the employee will not receive any help in recovering lost wages.

If you, or someone you know, are facing legal issues in the workplace United Employees Law Group has answers, Call Today for your free and confidential case review. Please feel free to CONTACT US with any questions about this blog or your exact situation.

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All employees must be able to know what their wages or salaries are a well as the exact amounts they take home when all deductions are factored. There are some paycheck deductions like social security and health insurance premiums that are legal but on the other hand, there are deductions that are very illegal. In the city of California, employers aren’t allowed to deduct several expenses from employees’ paychecks

* Items that can never be deducted

There is a basic rule in California stipulating that the employer must pay for all normal costs of running the business. He must never pass such expenses to the employee. Such expense must never be deducted from employees’ paychecks. These types of expenses include;

(a) Business expenses

Employees must be compensated for any loss that they suffer while doing any job. Employees must never deduct these business expenses from the paychecks of their employees. Such examples include gifts for clients, business meals, tolls etc.

(b) Cash shortages and breakages

An employer must never charge an employee for the losses that are caused by carelessness on the side of the employee. For instance, if an employee drops glasses in a restaurant business, the loss will be incurred by the business

(c) Tools and equipment

The employer must reimburse the employee for the items the employee purchases while carrying out business duties. Such item might comprise of hand tools or even uniforms

(d) Licensing and bonding

If employees must be licensed or bonded to work for employers, the employers must foot the costs. On the same note if an employer wants his employees to take fingerprints or even photographs, he must pay for the costs of all those items. Employees who are required to undergo medical exams as a condition for employment must be reimbursed such costs

(e) Tips

In California, tips are given to employees. Tips are not part and parcel of employees’ salaries. Tip sharing and pooling is allowed but employers and their managers must never participate

* Items that may be deducted

Employers may deduct expenses from employees’ paychecks only if they are allowed by the federal law or through collective bargaining agreements. Employers are also allowed to deduct health insurance premiums but they can only do this after getting an authorization from their employees in writing. This means that employees do not have the power to deduct any amount of money even if they owe such employees money

If employers advance money to their employees, they cannot make deduction for such advances unless such employees authorize in writing

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A good number of employees rarely understand why the money earned is not always 100% of the amount that an employer promises. This is simply because they do not take time to examine their pay stub. An employee’s pay stub is simply a part of the paycheck. The pay stub contains a lot of details about the salary received. Some of the details include:

The two categories of pay found on a paycheck

Gross pay

This is the initial amount earned by an employee prior to implementation of deductions by an employer.

Net pay

This is the amount that an employee is left with after all the necessary deductions have been made.

The deductions made from a paycheck

Medicare deduction

It is meant to serve Medicare insurance needs of an employee. It is computed as 1.45% of employees’ paycheck. The employer also aids the employee in addressing this deduction by contributing 1.45%.

Federal Insurance Contributions Act (FICA) or Social security tax

This tax is levied to guarantee employees of monthly social security payment when they retire. For this to be realized, employees must be deducted 6.2% from their paycheck. The employer is also mandated to pay 6.2% to facilitate the social security of the employee.

Life insurance deductions

In some cases, the employer may furnish the employee with a life insurance policy. In such an occurrence, the employee may be required to pay a certain amount from the annual salary to keep the policy operational.

Federal tax (FIT tax or Fed TX)

This is the tax that an employee owes the federal government.

State tax (SIT or St TX)

This is the amount imposed on employees by some states. It is deducted from the paycheck.

Local tax

It is not a common type of tax but it imposed on employees residing in certain regions or counties.

Year to date

This section of the paycheck indicates the amount paid for various deductions at any time of the year.

Other deductions include:

Miscellaneous deductions

They take the form of union dues, charitable deductions and other stated mandated deductions.

Leave duration

The paycheck might also include details concerning sick and vacation leave that an employee is entitled to. Information about the number of time each kind of leave has been utilized is also indicated and the remaining duration.

Finally, employees need to make efforts to comprehend all the information shown on their paycheck. The information is necessary in helping them understand how their net pay is arrived at, how they will budget for it and the benefits they are exposed to as a result of paying for the deductions.

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