Compensation that is given to workers includes money payments and benefits that they receive in exchange for the services they provide to their employer. The majority of employees get wage payments or a salary as their main form of compensation.
In California, an employer may be allowed to discipline a worker by docking their pay or placing them on unpaid suspension when they violate a workplace rule. These types of policies, however, can cause issues when an employee is exempt from overtime or is not entitled to receive overtime because they are paid by salary.
For an employee to qualify as exempt, they have to be paid a specific amount each pay period without any reductions based on the quantity or quality of work they completed. If an employer takes deductions from a salary employee, they are treating them as a non-exempt employee, meaning they would be entitled to overtime.
The money an employer may save docking their pay would likely be significantly less than the employee would make in overtime. Workers, however, can also get many other types of compensation, such as:
- Health insurance
- Life insurance
- Pensions
- Vacation benefits
- Stock options
- Disability insurance
Compensation that workers receive can be divided into two categories, fixed and variable. Fixed compensation is often a set rate and can be a salary, wages, and benefits.
Variable compensation depends on the performance of the worker. This type of compensation can include pay bonuses, case, incentives, sales commissions, and other similar forms of compensation.
In most situations, the form and amount of compensation a worker receives is outlined in the employment contract. The ability of an employer to use paycheck deductions depends mostly on whether the worker is on salary or is an hourly worker.
It is easier for employers to dock the paychecks of hourly workers. In California, an employer must get written consent to make many types of deductions from a worker’s paycheck, such as retirement, income taxes, and more. There is a limit on employer paycheck deductions that provides the deductions cannot drop the worker’s pay below the federal minimum wage amount.
If a worker is on a salary, paycheck deductions may actually have a positive effect on their pay because federal wage guidelines state that the worker’s salary cannot be reduced based on the quantity or quality of their work, as noted above.
This means that, when a salary worker’s paycheck is docked for subpar performance, they are not considered a salaried employee and are eligible to earn overtime. It is important to note, however, that this rule does not apply if the worker’s paycheck was docked because they violated a company safety rule.
A worker can schedule a California lawyer consultation for more information on what type of employee they are considered and whether their paycheck can be docked by their employer.
In California, Is It Legal To Dock Pay for Poor Performance or for Mistakes?
In California, docking paychecks or fining workers for mistakes, shortages, poor performance, or damages is generally not allowed. If, however, the worker agreed in writing that these types of deductions can be made, the employer may be allowed to do so.
Only in situations where an employer believes the worker was responsible for the mistake and the worker agreed in writing that they will pay for the mistake can their employer deduct it from their paycheck. It is important to have a California lawyer review any type of agreement made between a worker and an employer for the protection of both parties.
What Remedies Do I Have?
If a California employer wrongfully docks a worker’s paycheck, there are some remedies they may be able to pursue. If a worker has faced a paycheck deduction that is illegal under federal law, they can file a complaint with the Wage and Hour Division of the United States Department of Labor. If the complaint is resolved in the worker’s favor, they may be able to recover the amount of money that was deducted illegally.
If a worker has been subject to a paycheck deduction that is illegal in California, they can file a complaint for an illegal labor deduction with the Division of Labor Standards Enforcement (DLSE). This agency has offices throughout the State of California.
If a paycheck deduction was illegal under both federal and California state law, both the United States Department of Labor and the California DLSE should be notified. Both state and federal laws prohibit employers from engaging in retaliation against a worker who files an illegal wage deduction complaint.
Examples of employer retaliation can include, but are not limited to, demotion, termination, and suspension. If a worker’s employer engages in this conduct because they filed a complaint, they may be able to file a second complaint for retaliation.
This also applies to complaints that are filed internally in the company’s human resources department.
Does the Employer Have Any Defenses?
Yes, there are defenses that may be available to a California employer in response to an illegal paycheck deduction complaint. One common defense is that the worker authorized or consented to the deduction or that the deduction is allowed under California law.
There are many deductions that workers can voluntarily allow, or agree to, including:
- Health insurance premiums
- 401(k) contributions
- Charitable contributions
- Union dues
In some situations, an employer may also allow workers to take loans or advances. The worker may then authorize deductions to repay their advance or loan.
A worker who authorizes a voluntary paycheck deduction usually has to provide their consent in a written document that outlines the amount that will be taken out each pay period. Generally, employers cannot make deductions without the worker’s written consent.
There are also state-specific deductions that may be allowed or prohibited, such as:
- A deduction for the cost of the uniform the worker is required to wear may be allowed
- The State of California does not permit deductions for cash register shortages unless the employee was grossly negligent
- Deductions for mandated training and seminars typically cannot be deducted
Employers may not face penalties if the improper deduction was a mistake or an isolated incident and the employer reimburses the employee for the amount they withheld improperly. An employer may also be able to avoid facing penalties if they make a good-faith effort to comply with the law going forward and have a clearly communicated policy that prohibits improper deductions and proves a complaint procedure for workers.
Should I Contact an Attorney?
If you have any questions or concerns related to docking paychecks in California, whether you are an employee or an employer, it is essential to consult with an California employment lawyer. Your lawyer will be able to determine whether a deduction violated the law and what can be done to remedy the issue.
If you are an employee, your lawyer will guide you through the complaints process, whether you use an internal process, California state process, or federal process. Your attorney will represent you during any appearances before agencies and in court.
As an employer, your lawyer can help ensure improper deductions are not made and that any that are made are based on the required written agreements. If an improper deduction does occur, your attorney can help you remedy the issue before a complaint is even filed.
Use LegalMatch today to find a California employment attorney in your area who can help you with your paycheck docking issue in as little as 15 minutes. It costs nothing to submit your question and get responses from licensed lawyers in your area ready to help.
