An employer may deduct wages from an employee when required by state or federal law (i.e. a wage garnishment) or when an employee authorizes a deduction for health insurance premiums, benefit plan contributions such as 401K, or under a collective bargaining agreement. These employee authorizations for health insurance premiums or 401K benefits plans must be obtained in writing prior to wage deductions being processed. Employers may not deduct from an employee or take any portion of tips or gratuities intended for the employee (California labor code 351). Establishments in California may provide for “tip pooling” amongst those employees who provide direct table service to customers at establishments such as restaurants and bars.
If an employer requires a photo for identification, the employer must pay the cost of the photo. In addition, if a uniform is required, the employer must pay the cost of the uniform (California labor code 2802). The term “uniform” includes wearing apparel and accessories of distinctive design and color. If you are being deducted for your uniform cost, then your employer may be in violation of this California labor code and this wage deduction may be illegal. If you are required to wear a uniform, and your employer has had you purchase it directly at your own expense, then you should be reimbursed by your employer for this uniform cost. Medical or other physical exams required as a condition of employment must be paid for by the employer (California labor code 222.5).
Employers may not deduct costs from employee's paychecks related to breakage, cash shortage, equipment loss or other simple acts of negligence. However, an employee may be disciplined or terminated for such acts depending on the company policies and procedures. If an employer can prove gross negligence, willful destruction, dishonesty or an employee admits to such, there may be circumstances in which the employer may deduct such losses from the employee's paycheck. In general however, California considers ordinary losses and cash shortages to be part of the costs incurred by the employer operating the business. If you feel your employer is implementing illegal wage deductions for any of the items covered in this section, our California labor law attorneys can review your potential claim.
If an employee has an agreement to pay the employer back on a loan by deduction or installment from the employee's paycheck, the employee is only required to make the same amount of the installment from the final wages as he or she would normally pay under the original installment plan. The employer may not accelerate or increase the amount the employee would normally pay and deduct a greater amount from the employee's final paycheck. This is the case unless the employee has given his or her written consent for an accelerated payment to be processed as a paycheck deduction out of the final wages. Additional information about California final paycheck law can be found in our Unpaid Overtime section.
Accurate Wage Statements / Paycheck Deductions: California Labor Code 226 requires the issuance of a detailed deduction statement with each payment of employee wages. California law requires employers to give employees a wage statement that contains basic select information (i.e. hours worked, hourly rates of pay, an itemized list of deductions such as those for health/medical insurance or 401K benefit plans, etc). To satisfy this labor code requirement, it is permissible for California employers to establish a secured system that would represent each employee’s paycheck electronically that is available 24 hours a day on the internet, and secured with appropriate access controls. California employees who do not receive an itemized wage statement (or inaccurately prepared wage statements) may be entitled to $50 for the first violation and $100 for all subsequent violations, up to a maximum of $4000 per employee. If you have concerns about potential illegal wage deductions from your paycheck, or you are not being provided itemized wage and deduction information when you are paid, you may have a valid wage claim against your employer. It is also likely that you are not the “only employee” experiencing these California labor code violations.
We encourage you to contact our California labor lawyers to discuss your illegal wage deductions or inaccurate wage statements. We can assist you in determining if you have a potential CA wage claim.