FAQ’S About Deductions in California

The California labor laws give an employer the permission to withhold deductions from wages of an employee only if:

  1. When empowered or required by the federal or state law to do so
  2. When the employee has authorized the deductions in writing to cover various charges which are not amounting to a rebate on the employee’s wages

III. When the deduction is to cover health, pension contributions, health and is authorized by a wage or collective bargaining agreement labor code sections 221 and 224.

Besides the three reasons, there are various laws in California that prohibit employers from deducting or withholding amounts from the wages of the employees. Some of the common deductions that are illegal including, gratuities, photographs, bond, uniforms, business expenses and medical or physical examinations.

Which deductions are lawful?

  1. Those required by the state or federal laws such as income tax
  2. The ones that the employee has authorized through writing

III. Those authorized by a wage or collective agreement bargaining

Can an employer deduct the cost of something damaged or money lost while in duty?

The employer should not deduct the expenses which come in the line of duty if the losses come from accidents or simple negligence. But the employer can deduct the cost of the loss is proved to have happened because of gross negligence or dishonesty on the part of the employee.

What happens if money is lost in the counter of the employee?

The employer has the right to discipline the employee up to termination or bring legal action against the particular employee.

What about loans from the employer to the employee?

The employer and the employee need to have an agreement on the amount to be deducted in every paycheck. In case the employment ends before the full amount is paid the employer can only deduct amounts for a single installment in the final paycheck according to the California laws.

What about coming to work late?

The employer can deduct the amounts equaling the wages which would have been paid if the employee had come to work on time.

What to do after an illegal deduction by the employer?

One can file a legal lawsuit or file a complaint with the Division of Labor Standards Enforcement (DLSE).

What is the procedure followed after filing a complaint?

The complaint is assigned to a Deputy Labor Commission who determines how to proceed depending on the nature of the complaint. In case the decision is to hold claim both the parties are invited and a decision will be made. Both the parties can file an appeal in a civil court after a decision is made.

What if the employer does not pay or appeal?

The DLSE will enter the matter as an ordinary money judgment against the employer.

What if the employer retaliates against an employee because of objecting to a deduction?

The employee can file a relationship/discrimination complaint with the office of Labor Commissioner or file a lawsuit against the employer.