My Boss Wants Me to Pay For A Mistake

At the end of a shift, you notice that your cash register is surprisingly short, some equipment was damaged, or you have unknowingly accepted a bad check from a vendor. Can your boss make you pay for such a mistake? Many employees are often left wondering if their wages could be deducted for an error by their employer.

Can an Employer Dock Your Pay For a Mistake?

Under the federal Fair Labor Standards Act (FLSA), paycheck deductions may be permitted unless they:

  • dip your hourly rate of pay below the federal minimum wage, or
  • reduce the amount of overtime pay due under the Act

However, many states have imposed laws (beyond what’s allowed federally) to provide extra protection to workers so that their employers do not take advantage of them in this regard.

Take, for instance, New York’s Labor Law § 195-4.5. It prohibits deductions from workers’ salaries for things like spoilage, breakage, cash drawer shortages, fines, penalties, or recoupment of employer fees or costs. In other words, your employer cannot slash money from your tips to cover a short cash drawer or demand that you pay for the cost of your uniform in order to work at their establishment. Note that it is, however, legal for employers to make deductions for wage advances, insurance premiums, or childcare after taking written consent from the employee.

Washington D.C. has Rule 915 that prohibits wage deductions due to breakage, walkouts, or errors if the amount of the deduction reduces an employee’s pay to under the minimum wage.

California also bars employers from making employees pay for mistakes. The only exception to California’s Industrial Welfare Commission Wage Orders is a loss due to an employee’s dishonest or willful act, or gross negligence. The bar for what kinds of behavior qualifies as such is determined by an objective test under California Labor Code Section 224. This way, your employer cannot unilaterally decide that you were being willful, dishonest, or grossly negligent.

Remember, not every state offers similar protections to employees. For instance, Alabama, Arkansas, Florida, Georgia, Mississippi, Missouri, and South Dakota all defer to federal law on the matter of wage deductions.

Exempt vs. Non-Exempt Employees

Employees exempt from the FLSA typically work in roles like administrative, professional or executive. Wage deductions for exempt employees are permissible under very limited circumstances, such as violation of major safety rules or workplace misconduct. Non-exempt employees, on the other hand, may be subject to wage reductions as a disciplinary measure (unless their employment falls under union contract or other employment agreement).

What Is a Reasonable Mistake?

What constitutes a “reasonable” mistake can vary depending on the industry, job role, the length of your training, and your specific circumstances. It should not, however, vary based on the whims and temper of your employer. Examples of reasonable mistakes are:

  • Giving wrong change to a customer
  • Accepting a bad check from a client
  • Breaking a glass or plate in a restaurant or having someone in your table dine and dash
  • Making a mistake with data entry or missing a typo in an email or document
  • Double booking a meeting room
  • Confusing a date or making a minor calculation mistake

A labor and employment attorney can understand the specifics of your situation and determine whether it falls under a reasonable mistake.

When Can Employers Deduct Losses From Employees’ Paychecks?

An employer can impose certain kinds of discipline for mistakes. Under most circumstances, an employee may be terminated if they act dishonestly, continually fail to follow procedures, or drive up an employer’s costs because of their negligence or inattention to detail. For example, restaurant workers may have to pay for some additional costs like credit card fees on tips, ServSafe food training, and certain uniform maintenance costs like dry cleaning (as long as the employee still earns above minimum wage per hour).

The FLSA sets restrictions on wage deductions with certain exceptions. For instance, non-exempt employees may be charged for lost or damaged property if they had signed an agreement to that effect. Some states, like New York, New Jersey, and Delaware, offer greater protections than the FLSA. Others like Hawaii and Kentucky restrict pay docking unless a cash register under the employee’s sole control is found to be short. In Maine, exemptions are made for agricultural workers (since they are exempted from the state’s definition of ’employee’), or those working in a private homes like babysitters or care givers. In South Carolina, deductions are permissible, but employees are entitled to an itemized receipt for their reference.

What Should I Do If My Boss Demands Payment For a Mistake?

Your boss may be able to demand payment for certain kinds of mistakes, depending on the state laws and the type of mistake. You may take the following steps to ensure that your bases are covered:

  • Gather documentation of what is being asked of you. This might include collecting pay stubs, emails, written demands, as well as any agreements you signed upon being hired by the company.
  • Talk to the manager or the HR. Do this to see if you can resolve the issue internally.
  • Understand your employee contract and company policy. Check state law to find out whether your mistake falls under the category of “prohibited deduction”.
  • Set up a consultation call with a wage lawyer. A wage lawyer can discuss your next steps based on the specifics of your situation. In some cases, you may be able to recoup your costs if your employer has made illegal deductions to your pay.

What Are My Rights As an Employee?

Generally, employees have the right to refuse illegal deductions from wages. You can also secure protections against retaliatory actions, such as demotion, termination, and reduced hours. A wage and hour lawyer can give specific advice depending on your case.

My Boss Wants Me To Pay For A Mistake: FAQs

Are Employees Liable For Mistakes?

Your employer can hold you responsible for mistakes in some ways, but it comes with a limitation. For instance, you cannot be paid below the federal minimum wage (currently $7.25/hour for covered non-exempt employees) due to a mistake, no matter how much it costs your employer. You can however be held liable for misconduct like sexual harassment or extreme negligence.

Is it Illegal To Make Employees Pay For Mistakes?

It is illegal in many states to take deductions from your paycheck for honest mistakes. Making you pay for a mistake is illegal in all states if such deduction causes your hourly rate to dip below the minimum wage.

What Is Employee Misconduct?

Employee misconduct varies depending on your field. In some fields, it involves violating health and safety regulations. In others, it may look like giving discounts or perks to friends and family. Federal employees may be held to an additional standard involving misuse of government property, misappropriation of federal funds, and conduct unbecoming of their position.

Can You Be Fired For an Honest Mistake?

When an employee repeatedly makes the same mistake, it costs the employer. You can be fired for that error, even if you cannot have the cost of it deducted from your paycheck.

Can an Employer Sue an Employee For a Mistake?

Not all employee mistakes are deemed equal. For instance, double booking an appointment differs from employee misuse of company credit cards. Some kinds of errors open you up to liability in court, especially those involving misconduct or willful actions.

What is Wage Theft?

Wage theft occurs when an employer shirks paying the appropriate wage to their employees. Some paycheck deductions can be construed as wage theft. A wage attorney can help you recognize the difference between a fair ask and an unfair one from your employer.

About Top Legal Firm

Daniel Tan is chief editor of Top Legal Firm. Top Legal Firm is a free lawyers & law firm directory and legal blog that accept guest posts on wide range of topics. Contact Daniel Tan to publish your legal blog.

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