What California Employers Need to Know About Wage Deductions

If you are an employer in California, it is crucial that you understand what is allowed for wage deductions and what is prohibited. You could face serious legal consequences if you are not careful to ensure compliance with state labor laws. Even if you consider yourself a “small” business owner, it is vital that you understand the legal limits of wage deductions in California. Below is what you need to know about wage deductions in the Golden State.

California’s General Law on Wage Deductions

The issue of wage deductions is primarily codified in California Labor Code Sections 221 to 224. According to the law, you are prohibited from deducting amounts from your employees’ wages unless the deduction is;

• Mandated by law
• Explicitly authorized in writing by the worker
• Permitted by a wage or collective bargaining agreement

However, it is crucial to note that even with written authorization, there are strict regulations on what you can deduct.

What Deductions Can Employers Make?

Under California law, the following are the deductions that employers can legally make;

1. Legally Mandated Deductions

If you are required by law to withhold certain amounts, such as income taxes, from your employees’ paychecks, you must do so. And you do not need your employees’ consent to make these deductions, as they are mandated by state or federal law. An employee cannot bring a legal action against you for making these deductions without their consent.

2. Clearly Authorized Deductions

If an employee clearly permits certain deductions in writing, you can make the deductions. These may include deductions for;

• Insurance premiums
• Certain wage advances

However, the authorization must come from the employee voluntarily. Employers cannot coerce employees into agreeing to deductions.

3. Court-Mandated Deductions

As an employer, you can deduct money from an employee’s paycheck if a court order mandates it. In fact, you are legally obligated to comply with such orders. Court-ordered deductions include;

• Alimony
• Child support
• Debt repayment

4. Deductions Authorized by Bargaining Agreements

If a wage or collective bargaining agreement authorizes certain deductions, you can legally make those deductions. These include;

• Negotiated contributions
• Union dues

What Deductions are Prohibited?

There are several deductions that the law prohibits, including the following;

1. Gratuities (Tips)

The law prohibits employers from keeping or deducting tips left for employees. However, tip pooling is allowed among employees who provide direct table services to customers, such as waiters.

2. Photographs

If you require employees or job applicants to provide photos for whatever reason, you must cover the cost.

3. Uniforms

If you require your employees to wear a specific uniform, you must pay for it. Uniforms include clothes or accessories with a distinct color or design needed for the job.

4. Business Expenses

You must reimburse your employees for any necessary work-related expenses or losses. This includes things like equipment, travel, or materials used while performing work duties.

5. Medical Expenses

Employees cannot be required to pay for job-related or legally required medical or physical exams. As the employer, you must cover these costs.

Contact Us for Legal Help

California wage deduction laws are quite strict, and there is a high risk of getting it wrong. Contact an experienced employment attorney at SAC Attorneys LLP at (408) 436-0789 or online for assistance with ensuring compliance.