California Labor Code § 221 says that employers may not take back any wages already paid to an employee. These deductions are illegal, and employers who violate this section face civil and criminal penalties.
However, there are limited exceptions to Labor Code 221 that let employers deduct costs like health insurance.
The language of the statute reads that:
221. It shall be unlawful for any employer to collect or receive from an employee any part of wages theretofore paid by said employer to said employee.
California Labor Code 221 prohibits employers in the state from collecting or receiving an employee’s wages that have already been paid out.[1]
This means that an employer cannot withhold wages that the employee has earned for any of the following reasons:
However, some important exceptions to these rules allow for some wage deductions.
California employment law lets employers make certain deductions from an employee’s paycheck. These include:
Employers can also lower employees’ wages if the worker comes to work late. While these deductions generally have to be proportional to the time lost, employers can deduct a half-hour’s wage if a worker is late by less than 30 minutes.[4]
Wages can also be deducted for damage to company property that resulted from the worker’s gross negligence or an intentional act.
California employers can also deduct wages if their employees consent to the deduction.
If an employee consents to a setoff or wage deduction, then the employer can make it, so long as:
In California, no deductions are permitted against an employee’s last paycheck.
No deductions are allowed against an employee’s final paycheck, even if the employee consented.
California law states that a worker’s unpaid wages are due and payable to the employee immediately after their discharge.[7] This final paycheck has to be free from any deductions or setoffs.[8] For public policy concerns, California state law exempts certain wages from garnishment by creditors. Case law applies this exemption to any part of wages owed to employers by their employees. [9]
Employers can face waiting time penalties for intentionally failing to pay these wages immediately.[10]
Employees who think that their employer has made an unlawful deduction from their wages can:
These claims aim to recover:
If an employer retaliates against an employee who files a claim over unlawfully deducted wages, the employee can also file a retaliation claim or lawsuit .
For more in-depth information, refer to these scholarly articles:
[1] California Labor Code 221 LAB.
[3] California Labor Code 224 LAB.
[4] California Labor Code 2928 LAB
[7] California Labor Code 201 LAB.
[8] Barnhill v. Robert Saunders. supra.
[9] Barnhill v. Robert Saunders, supra (California court of appeal stating that “Permitting appellant to reach respondent’s wages by setoff would let it accomplish what neither it nor any other creditor could do by attachment and would defeat the legislative policy underlying that exemption.”)