Can we deduct from pay to replace equipment our employee damaged? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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Can we deduct from pay to replace equipment our employee damaged?

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Q. We have an employee whose company-provided laptop fell and broke while he was working from home. Can we deduct the cost of the computer from the employee’s paycheck?

A. No, it is not lawful to deduct from an employee’s wages to pay for accidental losses of company property. Employers are prohibited from deducting the cost of broken property from an employee’s wages if the loss of company property occurred by reason of mistake or accident.

California courts have held that losses occurring without any fault on the part of the employee or that are merely the result of simple negligence are inevitable in most businesses. Therefore, in those circumstances the employer must bear the loss as a cost of doing business.

The Industrial Welfare Commission Wage Orders spell out an exception to this rule. Employers have the right to deduct from an employee’s wages for any cash shortage, breakage or loss of equipment if the employer can show that the problem was caused by a dishonest or willful act, or by the employee’s gross negligence.

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