Paycheck Deductions for Employee Mistakes: Federal and State Pay Docking Laws
Updated March 2, 2020
Mistakes happen in the workplace, whether it's accidentally damaging company property, accepting a bad check, or ending up with a shortage in the cash register. Whether or not your employer can charge you for these mistakes depends on federal law and the laws of your state.
Pay Docking and Federal Law
Under the federal Fair Labor Standards Act (FLSA), employers are permitted to dock your pay for making mistakes, but paycheck deductions can’t reduce your pay below minimum wage. However, many states provide extra paycheck protection for employees who make mistakes (the laws in each state are listed below). In California, for example, pay docking isn't allowed unless the employee acted dishonestly, deliberately, or with gross negligence.
Employees Exempt From FLSA Overtime Rules
Employers generally aren't allowed to dock the pay of salaried workers who are exempt from the FLSA's overtime rules (usually employees with some amount of authority and discretion at work). One exception is that employers can deduct pay from an exempt employee who has committed a serious safety violation. And employers can place workers who have violated workplace conduct rules (such as rules regarding sexual harassment) on unpaid leave if they have a written policy that applies to all employees.
Otherwise, employers can't deduct pay from an exempt worker's salary for mistakes. Doing so risks losing that employee's exemption and could result in a large overtime bill for the employer.
State Laws on Paycheck Deductions for Employee Mistakes
Many states have laws that limit an employer's ability to dock their workers' paychecks for mistakes they've made at work—for example, by requiring the employee's written consent. Several states, including New York, New Jersey, and Delaware, prohibit pay docking entirely. In states where pay docking is allowed, it is usually limited to the following types of mistakes:
- cash or cash register shortages
- acceptance of bad checks, or
- lost, damaged, or broken equipment.
In states without any specific laws on pay docking, the federal FLSA provides the only protection. That means that in those states, employers can reduce your pay as long as it doesn't take your earnings below minimum wage.
50-State Chart: State Laws on Pay Docking
The chart below contains a summary of each state's rules on pay docking for employee mistakes. Keep in mind that laws can change, so check with your state's labor department or an employment lawyer to make sure you're up-to-date.
| State | Rules on Pay Docking |
|---|---|
| Alabama | None - Federal law applies |
| Alaska | Generally not allowed. Missing, lost, or stolen cash/property can only be deducted if you admit, in writing, that you personally took them. |
| Arizona | Employee's written consent required |
| Arkansas | None - Federal law applies |
| California | Not permitted unless employee acted dishonestly, deliberately, or with gross negligence |
| Colorado | Generally not permitted. Employers are legally barred from making deductions to cover cash shortages, lost or damaged property, bad checks, or any similar scenarios. |
| Connecticut | Only with employee's written authorization to employer on a form approved by the Connecticut labor commissioner |
| Delaware | Not permitted |
| Florida | None - Federal law applies |
| Georgia | None - Federal law applies |
| Hawaii | Generally not permitted even with written agreement. Cash shortages from a register/box/till under employee's sole control are one of the few exceptions. |
| Idaho | Employee's written consent required |
| Illinois | Employee's written consent required |
| Indiana | Generally not permitted |
| Iowa | Not allowed, with some exceptions. For example, employers can deduct for damaged or lost property if you caused the incident through willful or intentional disregard of your employer's interests |
| Kansas | Not permitted |
| Kentucky | Generally not permitted, though exceptions might exist for shortages from a cash register/box/till that is under employee's sole control. |
| Louisiana | Generally not permitted, unless the incident was caused through employee's willful or negligent action, or employee was found guilty of theft from your employer. Any fines cannot exceed actual damages. |
| Maine | Generally not permitted, with exceptions for agricultural workers and those working in a private home. |
| Maryland | Employee's written consent required |
| Massachusetts | Unclear, but likely not permitted. Case law established that a company could not deduct from an employee's wages to cover damages they caused to a company truck. |
| Michigan | Employee's written consent required |
| Minnesota | Permitted if employee consents in writing after the mistake has occurred, or employee held liable in court for damages |
| Mississippi | None - Federal law applies |
| Missouri | None - Federal law applies |
| Montana | Not permitted |
| Nebraska | Employee's written consent required |
| Nevada | Employee's written consent required and employer must have reason to believe employee was responsible |
| New Hampshire | Not permitted |
| New Jersey | Not permitted |
| New Mexico | Employee's written consent required |
| New York | Not permitted |
| North Carolina | Employee's written consent required, or if employee has been arrested or charged. If found not guilty, employer must repay employee. |
| North Dakota | Employee's written consent required |
| Ohio | Employee's written consent required |
| Oklahoma | Employee's written consent required and employee must be only person responsible for mistake |
| Oregon | Not permitted |
| Pennsylvania | Not permitted |
| Rhode Island | Not permitted |
| South Carolina | Only permitted if employee receives written notification of the policy on deductions upon hire, or 7 days before any changes become effective. Employee is entitled to an itemized statement of any deductions. |
| South Dakota | None - Federal law applies |
| Tennessee | Employee's written consent required |
| Texas | Employee's written consent required |
| Utah | Employee's written consent required, or sufficient evidence is presented to convince an administrative law judge or hearing officer that the deductions are justified. |
| Vermont | Generally not permitted |
| Virginia | Employee's written consent required |
| Washington | Deductions can only be made from employee's final paycheck, and cannot be "saved up" from previous pay periods. Employee's written or oral consent required. |
| West Virginia | Employee agreement required |
| Wisconsin | Employee's written consent required, OR if employer and employee's representative (e.g. a union) agree the loss was caused negligently or intentionally, OR a court finds employee guilty/liable. |
| Wyoming | Permitted, but deductions are subject to numerous restrictions that limit when and how they apply to employees. The specific restrictions depend on the type of mistake. |
See an Employment Lawyer
If you think your employer has violated wage and hour laws, consult with a local employment lawyer.