Legal Question in Business Law in California

Only if the employer wants to get hauled in front of the California labor board.

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Most attorneys will tell you that type of withholding violates the California labor laws for a host of reasons. If you are the employee and this happened, consult an attorney right away. If you are the employer and have done this, you also need to get in touch with a lawyer right away.

Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise

Franchise Attorney

Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise

Franchise Attorney

California law severely limits the circumstances in which an employer may deduct damages or debts owed by an employee from their wages. (Barnhill v. Robert Saunders (1981) 125 Cal.3d 1.) An employer may not deduct from the employee's wage any amount to compensate the employer for any loss or damage caused by the employee's simple negligence. (Kerr's Catering Service v. Department of Industrial Relations (1962) 57 Cal.2d 319.) The employer must bear this loss.

An employer may not deduct any unpaid balance of a debt owed by the employee, unless there is a lawful wage garnishment order, issued by a court of law. An employer may deduct damages or loss resulting from gross negligence, willful misconduct or dishonesty. An employer who does so, however, does so at great risk. The burden of proof is on the employer to prove that the loss was the result of misconduct, gross negligence or dishonesty, and if the employer fails to meet this burden, can be subject to waiting time penalties. (Labor Code, sec. 203.)

If you are the employee, and this has happened to you, I suggest that you speak to an attorney that handles wage and hour disputes immediately. The time to bring such an action runs from each paycheck.

You have gotten good answers. I would just add that if the employee is paid on commission and the sales errors resulted in the employee being paid commissions for sales that did not go through or were reversed due to the employee's error, the commissions can be reversed.