Employers that make deductions from employees’ wages for damaged or missing equipment must follow the law carefully to stay out of hot water.
In Galleher v. Artisanal LLC, an employer ended up in court because of its practice of regularly deducting the cost of any broken property, such as dishes and glassware, from workers’ paychecks.
Along with these deductions, the employer also deducted a mandatory uniform rental fee each pay period and an occasional laundry fee.
The amount of these wage deductions fluctuated by pay period, and they often brought employees’ pay below the federal minimum wage—a practice strictly forbidden by the Fair Labor Standards Act (FLSA).
Because the employer had no proof it made a “good faith” effort to follow the FLSA when making the deductions, the court ordered it to pay back wages and liquidated damages to several employees.
The FLSA is clear: When making wage deductions for any items that are primarily considered as beneficial or convenient to the employer (e.g., tools, equipment, uniforms, damages/financial losses), workers’ pay can’t fall below the minimum wage in any workweek.
Many states now have even stricter guidelines for wage deductions that trump the requirements of the FLSA.