Pay Deductions Under California Employment Law

Pursuant to California employment law, a business can lawfully withhold amounts from an employee’s pay only: (1) if required or allowed to do so by state or federal law, or (2) any time a deduction is expressly authorized in writing by the individual to pay for insurance premiums, benefit plan contributions or other deductions not amounting to a rebate on the person’s wages, or (3) when a deduction to pay for wellness, welfare, or pension contributions is expressly certified by a wage or collective bargaining contract.

Wage Garnishment

Despite the fact that a wage garnishment is a legal deduction from pay under California labor laws, an employer cannot terminate a worker for the reason that a garnishment of wages has been threatened or if the worker’s pay has been subjected to a garnishment for the satisfaction of one judgment.

The capability of a company to deduct amounts from an individual's pay due to a cash shortage, breakage, or loss of equipment is specifically governed by the Industrial Welfare Commission Orders and limited by judicial decisions. Additionally, there are various judicial holdings that significantly limit an employer’s power to take an offset against an employee’s pay.

Some frequent payroll deductions generally made by employers that usually are illegal include:

Gratuities. An employer cannot collect, take, or receive any gratuity or part thereof given or left for an employee, or deduct any amount from wages due an employee on account of a gratuity given or left for an employee. However, a restaurant may have a policy allowing for tip pooling/sharing among employees who provide direct table service to customers.

Photographs. If an employer requires a photograph of an applicant or employee, the employer must pay the cost of the photograph.

Bond. If an employer requires a bond of an applicant or employee, the employer must pay the cost of the bond.

Uniforms. If an employer requires that an employee wear a uniform, the employer must pay the cost of the uniform.

Business Expenses. An employee is entitled to be reimbursed by his or her employer for all expenses or losses incurred in the direct consequence of the discharge of the employee’s work duties.