Can Your Employer Deduct Money From Your Paycheck?

If your employer made an error on your paycheck and now wants to deduct money from subsequent paychecks to account for the payroll errors, you might wonder, “Is my employer allowed to deduct money from my paycheck?”

The short answer is, “No.” Under California employment law, employers are prohibited from deducting any amounts of money from their employees’ paychecks for payroll errors. Thus, if your employer overpaid you in your last paycheck, the company cannot deduct money from your next paycheck.

Contact a Los Angeles wage and hour dispute attorney at Litigation, P.C. to determine what your employer can and cannot do when attempting to deduct money from your paycheck.

Can California Employers Deduct Money from Employees’ Paychecks?

California has one of the most pro-worker collection of employment laws in the country. California law protects employees’ right to be paid for their hard work, which is why there are strict rules governing when an employer can and cannot deduct money from a worker’s paycheck.

California Labor Code § 221 prohibits employers from collecting or receiving money from any part of the employees’ wages paid beyond:

• Court-ordered wage garnishment
• Tax withholding
• Voluntary contributions to health insurance or retirement account

Even if an employee owes money to the employer, the employer cannot withhold the money from the employee’s paycheck unless the parties agree to the withholding. This means that your employer must enter into an agreement — in writing — that allows the employer to deduct a specified amount of money from your paycheck for a reason beyond the three exemptions above.

Example. If your employer overpaid you $1,000 in your previous paychecks due to a payroll error, you and the employer may agree to deduct $200 from your next five paychecks to pay your employer back unless doing so would result in your being paid below the minimum wage.

If there is no agreement between you and your employer, your employer cannot simply deduct any amount of money from your paycheck without your permission.

What Happens if You Do Not Agree to the Deductions?

Since California is an at-will employment state, your employer may be able to lawfully fire you for your disagreement about the deductions. However, your employer may also file a lawsuit against you to get its money back.

For example, if your employer overpaid you in your previous paychecks and now wants to get ITS money back by withholding the overpaid amount from your next paychecks, your disagreement to deduct the amount from your paychecks could result in a lawsuit.

Your employer would have the right to file a lawsuit against you to get their money back. If the judge sides with your employer, they will allow the employer to garnish your wages for the overpaid amount of money. The judge may also have the authority to require you to enter a written agreement with the employer, allowing the company to withhold the specific amount of money from your wages.

If you believe that your employer violated your wage and hour rights in California, speak with our employment lawyer at Litigation, P.C. Call 424-284-2401 for a confidential consultation.