Deductions And Compensation: What’s Legal - Aiman-Smith & Marcy
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Deductions And Compensation: What’s Legal

A general principle of the work world is that you should be paid fairly. That means that you are compensated for anything that is part of your job and that money shouldn’t be taken out of your paycheck willy-nilly. Knowing exactly what that covers is critical to defending your rights in the workplace. Fortunately, the rules are clear.

Required Compensation

According to chapter 2, article 2 of the California Labor Code, an employer has to compensate an employee for anything that the employee has to spend in order to do a job or because of a direct order from the boss. Basically, if the boss tells you to go buy pencils for the office, he or she has to cut you a check later for however much you spent on the pencils. This holds true even if the boss told you to do something illegal, provided that you didn’t think it was illegal at the time.

There are also very specific things that the employer must cover. Does the job require a bond or a photograph? Does the employer require an employee to wear a uniform? According to the California Labor Code section 401, the employer has to cover these expenses.

Under the same code, a prospective employer can’t require you to pay for a medical examination that is a condition of employment.

Legal Deductions

No one likes getting a smaller paycheck, but there are a few deductions that your employer is either allowed or required to make. The deductions for income taxes, SSI, and other federal and state taxes are required. Money to cover health, welfare, or pensions can be taken out if they are the result of collective bargaining or a wage agreement. You can authorize deductions in writing to cover insurance premiums, hospital or medical dues, provided it doesn’t amount to a rebate. You can also agree to pay back a loan to your employer through paycheck deductions, though the employer can’t take the balance of the loan from your paycheck in a lump sum should you leave the job.

Illegal Deductions

There are plenty of things that your employer can’t take money out of your paycheck for. Your employer can’t take money out of your paycheck to cover any medical or physical exam that is required by law. He or she also can’t deduct money to pay for something you broke by accident or by negligence. This includes cash shortages or losses. The employer can try to prove that you broke something on purpose or that you employed gross negligence, but the DLSE (Division of Labor Standards Enforcement) doesn’t assume that the employee was to blame.

Next Steps

The Division of Labor Standards Enforcement allows you to file a wage claim if your employer fails to compensate you fairly or deducts money for something he or she shouldn’t. Don’t forget to do this quickly, since you have 3 years to file a report on employers who make illegal deductions or fail to reimburse you what you are owed.

The DLSE has a form you can download. Once you print it out, you will have to send the DLSE information about your employer and all hours worked. If you don’t have the address and name of the company that you work for, you can send the DLSE the vehicle license plate numbers of your boss and shift manager.

Once you file a claim, this will go to a Deputy Labor Commissioner, who will decide what to do with the complaint. It can be dismissed, but the Commissioner can also set up a conference or a hearing. A conference is a meeting between the parties to decide if the claim is valid and to try to resolve the claim. A hearing is more formal: the proceedings are recorded and the parties testify under oath. The hearing will result in an Order, Decision or an Award.

You can also file a lawsuit to recover your lost wages. Either way, you might want to talk to a lawyer to see if he or she can offer advice about your situation.

Aiman-Smith & Marcy is a boutique law firm that specializes in employment law, consumer fraud, and class actions.  Visit our website any time for more information.