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Can we make payroll deductions to pay for employees’ mistakes?

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in Compensation and Benefits,Human Resources,Small Business Tax,Small Business Tax Deduction Strategies

Q. Our staff includes employees who do repair work and are paid by the job. We offer a 90-day guarantee to our customers. If a customer has to have a repair redone, can we deduct from the employee’s subsequent wages the money we paid for the faulty first repair?

A.
Colorado wage law imposes strict limits on deductions from wages. You should get an agreement with your employees that the wages are not “fully earned” until the 90-day period expires without a return, and an agreement that deductions for charge-backs within the 90 days are permitted. However, be aware that deductions cannot bring an employee below minimum wage.

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