Some employers threaten to deduct wages from employees who break merchandise or cause lost profit. Retailers may promise to compensate for cash register shortages with employee paychecks, and managers may threaten to deduct pay from employees who damage merchandise. Both are illegal under New Jersey State Wage Payment Law.
Understanding when an employer can and cannot deduct your pay may help you plan litigation.
Employers may deduct wages from employee paychecks in some circumstances, but the law clearly defines these terms, and most require the written consent of employees. State and national law do often require paycheck deductions such as Social Security and Medicare tax.
Aside from these, deductions generally require employee consent in writing or through a collective bargaining agreement. For example, employees may authorize deductions for charitable or other causes by voluntarily agreeing to the deduction in writing. This would include employee giving plans or matching programs. Equipment or uniform purchases also qualify under this exception so long as the employee agrees to the deduction.
Some positions in New Jersey involve participation in collective bargaining agreements. These may include deductions for clothing or equipment rentals, cleaning fees, labor organization dues or similar items, but the employer must approve these agreements to be legal.
New Jersey law explicitly prohibits wage deductions for breakage, spillage and cash register shortages. Employers may not use deductions as punitive measures for compensation of lost profit. This means that, in most cases, restaurant owners cannot dock servers’ pay for dine-and-dash incidents, and warehouse managers cannot deduct workers’ wages for damaged merchandise.