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September 17, 2014 in HR, Employee Management

Can You Fine Employees

Can employers make employees, who come up short in their tills, repay the amounts they’re short? And if they don’t, can we deduct the shortage from their pay? Can you fine employees?

Can You Fine Employees?

Question 1: Can you fine an employee for causing an OSHA fine?

Answers: These two questions deal with the same subject: Does the employer have the right to discipline an employee by levying fines or deducting amounts from the employee’s pay?

This is quite commonly done in retail stores, service stations, restaurants and banks, businesses where employees are responsible for their own tills or drawers in tills.

If you want to force an employee to repay losses (by deducting from pay), or if you want to discipline an employee by levying a fine (or deducting a fine from pay), consider the following:

  1. Federal wage and hour law. The Fair Labor Standards Act does allow an employer to make deductions from anNew call-to-action employee’s wages, including deductions for “disciplinary reasons.” However, when deductions are made for disciplinary reasons, in no event may such deductions reduce the earnings to an average below the applicable minimum wage or cut into any part of the overtime compensation due to the employee.
  2. Your state law. Your state may have a law that limits your right to deduct from an employee’s pay. Some states, for example, allow deductions of losses only when the employer can prove the losses were due to the employee’s willful or intentional disregard of the employer’s interests.
  3. The unemployment benefits law. If you discipline your employee this way, the employee may leave and file for unemployment insurance, charging the discipline was unfair. If you cannot positively prove the employee was responsible for the disciplinary action, you run the strong risk of having to pay unemployment benefits. You must be able to positively prove the employee was guilty of willful or intentional misconduct or negligence.
  4. Proving a loss. If you are going to have a policy of deducting from pay for a loss or for missing merchandise, be sure you have a foolproof system for proving responsibility for the loss or for the missing merchandise. (Example: Each employee has access to only one till, or one drawer, and is solely responsible for the contents.)

Without such a system, how do you positively prove which employee is responsible for a loss?

Important: If you want to be able to deduct losses from an employee’s pay, be sure to:

  • Obtain guidance from an attorney first.
  • Prepare a written policy and give it to all employees before initiating the practice.

You should know, this is a very tricky issue, so before you withhold money from an employee’s check for amounts they owe you, proceed with caution. You can’t go wrong by checking with your professional adviser.

For help on how to navigate fining and reprimanding your employees in a way that is fair and compliant, contact Excelforce today!New call-to-action