Compensation for an Embezzler

The Washington Department of Labor & Industries has a regulation addressing deductions from the final paycheck (linked below). Take a look at Section (3). A deduction from final pay is permitted “[f]or any cash shortage, walkout (failure of customer to pay), breakage, or loss of equipment, if it can be shown that the shortage, walkout, breakage or loss was caused by a dishonest or willful act of the employee.” A deduction is also permitted for employee theft “if it can be shown that the employee's intent was to deprive and that the employer filed a police report.” However, there are two requirements for such as deduction: (1) the deduction must be for a loss occurring in the final pay period, and not to recoup losses in prior pay periods; and (2) the deduction should not reduce total wages below the minimum wage. It’s not clear to me whether the $500 deduction would result in compensation less than the minimum wage. Keep in mind, though, that it is up to you to decide what to do after weighing your legal risks. In some situations--such as here, where you don’t want to pay an embezzler–an employer is comfortable taking on the risk of getting sued in order to do what seems right. Here, if the situation does violate the regulation, the employee would need to take action against you to collect the wages. Hopefully an employee facing criminal embezzlement charges would not try to do that. If the embezzler does try to bring an action, you could pursue a counter-claim or seek a set-off against the amount owed to the company. Hope that helps. —Don