Employers sometimes commit wage theft through illegal deductions from their workers’ paychecks. California law protects employees and penalizes employers for these violations, just as they do for failing to pay overtime, denying rest or meal breaks or other illegal activity.

In the Golden State, employers can only make deductions allowed under state or federal laws, or when an employee authorizes them. That approval must be in writing and include insurance premiums or deductions for other health, welfare or pension contributions.

 Unlawful payroll deductions

An employer’s ability to deduct wages based on a cash shortage, breakage or loss of equipment is detailed through court decisions and regulated by the Industrial Welfare Commission. Common illegal deductions include:

  • Gratuities: Employers cannot confiscate tips left for servers in restaurants. However, they can establish tip pooling policies, where employees providing direct table service share equally.
  • Photographs: Employers must pay the cost of mandated ID photos.
  • Bond: If a fidelity bond is required for the position, employers must pay.
  • Uniforms: When an employee is required to wear a uniform, the company must absorb the cost.
  • Business expenses: When an employee incurs costs or losses due to their job duties, they must be reimbursed by the employer.
  • Medical exams: Employers cannot force applicants to pay for a pre-employment physical or medical examination as a condition for employment. Likewise, they cannot deduct a current employee’s pay for exams required by federal, state or local laws, regulations and ordinances.

Employers who make loans to employees can make deductions to paychecks if authorized by the worker. However, strict rules apply, and lump sum payments are not allowed on a final paycheck for a terminated worker.

Compensation for unlawful deductions

Workers whose pay is illegally deducted can recover penalties, interest and attorneys’ fees. When significant losses or multiple claims arise, working with an experienced employment attorney is crucial for receiving compensation and meeting deadlines to file. Your attorney will advise you on filing a claim with the state Division of Labor Standards Enforcement. In many cases, it may be appropriate to file a lawsuit.