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| I'm looking to find out if deductions can be made on a final paychex when an employee has been caught stealing?
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Employee Debts
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State law severely restricts the circumstances in which you may deduct damages or debts owed by an employee from his/her wages.
Best Practices
Review the following before making deductions from an employee’s wages.
The Labor Commissioner is guided by the following:1
Simple negligence: You may not deduct from an employee’s wages any amount to compensate yourself for loss or damage caused by the employee’s simple negligence.2 You must bear the burden of losses which result from an employee’s ordinary negligence or incompetence;
A debt: You may not deduct from an employee’s final check any amount representing the unpaid balance of a debt owed by the employee, even though the indebtedness is contained in a written agreement to pay the full amount of the debt on demand, at termination or otherwise;3 and
Gross negligence, willful misconduct, or dishonesty: You may deduct from the employee’s wages an amount sufficient to compensate for loss or damage resulting from gross negligence, willful misconduct, or dishonesty. You may take such deduction from the employee’s wages during employment and/or from the final check.
If you deduct from an employee’s paycheck any amount believed to be the result of gross negligence, willful misconduct, or dishonesty, the burden of proof is on you to establish the weight of evidence for the withholding. If you fail to meet the burden of proof, you will likely be subject to waiting time penalties.4
Any doubt as to your ability to prove misconduct is therefore best resolved in a small claims or other court proceeding against the employee, rather than a deduction from wages owed that employee.
A lack of prudent care (neglect)
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