Employee Debts, Loans and Deductions

While you can make deductions from wages for insurance premiums and other health and welfare plans, there are limits on other deductions.

Employers are prohibited from making unauthorized deductions from wages which are, in effect, a self-help remedy for the employer.¹ Labor Code section 221 prohibits an employer from recovering wages already paid to an employee.

You cannot deduct from wages (or require reimbursement) from an employee for any cash shortage, breakage or loss of equipment unless you show a dishonest or willful act, or gross negligence.²