Wage Deductions May Be Made When Permitted by Federal or State Law
California law allows the employer to withhold or divert any portion of wages where the deduction is required or the employer is empowered to do so by federal or state law. This category includes withholdings for federal and state taxes. Also, employers may automatically enroll employees in a defined contribution plan, e.g. 401(k), 403(b), 457 plans, under an automatic contribution arrangement unless the employee elects to not participate (and elects to receive cash payment). Under an automatic contribution arrangement, an employee is treated as though he or she made an elective contribution unless they specifically opt-out of the arrangement or specify a different amount for their contribution. In order for a plan to qualify as an automatic contribution arrangement under federal law, the employer’s plan must meet federal statutory requirements, including specified features to insure that the plan provides for automatic deferral of compensation, matching or non-elective employer contributions, and specific notice to employees regarding the automatic contribution, including the right to elect to receive cash payment.
Wage Deductions May Be Made With the Employee’s Consent
Deductions for insurance premiums, hospital or medical dues or other deductions may also be deducted upon written consent of the employee. Deductions for health and welfare or pension payments provided by a collective bargaining agreement are also allowed even without the written consent of the employee.
Deductions for “Self-Help” Are Illegal
California law prohibits deductions from wages which in effect allow an employer a self-help remedy. Cash shortages and other losses occurring without any fault on the part of the employee or merely as a result of simple negligence are inevitable in almost any business operation, and the employer must bear such losses as an expense of doing business. An employer is free to discipline any employee whose carelessness caused the losses. However, it is illegal to threated firing an employee in the event the employee refuses to allow an illegal deduction.
What if an Employee Causes a Loss Due to Their Dishonesty, Willful Act, or Gross Negligence?
Employers have the right to deduct for losses suffered as a result of a dishonest or willful act or through the gross negligence of the employee. However, any employer who resorts to self-help does so at its own risk. In the event it is determined that the employee was not guilty of a dishonest or willful act or gross negligence, the employee would be entitled to recover not only the amount of wages withheld, but any waiting time penalties and interest due.
How Can a Lawyer Help Me Get My Illegally Withheld Deductions?
Los Angeles Employment Attorney Thomas M. Lee has helped many clients over the past 22 years of his practice obtain not only their unlawfully withheld deductions taken by their employers, but also their unpaid final paycheck, unpaid overtime wages, unpaid minimum wages, meal break penalties, paycheck stub penalties, and the 30-day wage penalty. Generally, a lawsuit for unpaid wages must be filed within 3 years from when they are owed, and a lawsuit for penalties must be filed within 1 year. Call Thomas M. Lee at 213-251-5533 for a free legal consultation today.
Please note that the information provided on this website is for general information purposes only and is not to be construed nor relied upon as legal advice nor the formation of an attorney-client relationship. For a free consultation with Attorney Thomas M. Lee, please contact us.
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