Payroll Deductions

Payroll Deductions https://wahospitality.org/wp-content/uploads/2016/05/calculator-428294_640.jpg

During an ongoing employment relationship (i.e., employee is still employed with the employer on payday), the following deductions are allowed, and may reduce the employee’s wage below the minimum wage in effect at the time of the deductions:

  • Deductions required by law, such as federal and state taxes, garnishments ordered by a court, and the employee’s share of workers’ compensation premiums.
  • Deductions that the employee has agreed to in advance and in writing, that are for a lawful purpose and for the employee’s benefit. Neither the employer nor any person acting in the employer’s interest can derive any financial profit or benefit from such deductions, other than reasonable interest in the case of an employee loan.

The following deductions are allowed only from an employee’s final paycheck, only when incurred during the final pay period, and only when there is an agreement between the employer and employee. Although there is no requirement that such an agreement be in writing, L&I recommends that employers put the agreement in writing and obtain written acknowledgement from the employee. Even if there is an agreement, these deductions may not reduce the employee’s final check below the applicable minimum wage:

  • Till shortages, but only if the business has established policies regarding cash acceptance, and if the employee has counted money in the till before and after his or her shift and has sole access to the till during the shift.
  • Breakage, loss, or damage of equipment, but only if it can be shown to have been caused by the worker’s dishonest or willful act.
  • Bad checks or credit card purchases accepted by the employee, but only if the business has established check and credit card acceptance policies before the event.
  • Employee theft, but only if the business can show that the employee’s act was dishonest or willful, and the business filed a police report.
  • Other agreements made between the employee and employer at the time of termination. If these agreements are for the worker’s personal benefit, the business may reduce the final check below the applicable minimum wage.

Deductions for unemployment compensation premiums are never allowed. The entire premium must be paid by the employer.

Employers must furnish itemized pay statements to each employee at the time of payment of wages showing all deductions for the pay period, as well as the pay basis, rate or rates of pay, and gross wages.

 

Note: Employers may require that their workers receive their pay in the form of automatic deposits so long as there is no cost to the workers.

 

Examples:

Allowable Deductions

  • Employee starts a bar tab and asks employer to deduct the bill from his or her paycheck.
  • Employee asks employer for an advance on his or her next paycheck; advance is deducted from said check.

 

Not Allowable

  • Employee breaks a rack of plates. Employee asks employer to take the value of plates out of paycheck rather than get fired.

 

Reference:

For general information on state administrative policies, visit http://lni.wa.gov/WorkplaceRights/Rules/Policies/default.asp.

If you have any further questions about this topic or others, see the Department of Labor & Industries’ Help for Small Business page at http://www.lni.wa.gov/Main/SmallBusiness/.

 

Rev. 12/31/17

 


This article is an excerpt from the Handbook for Excellent Restaurant Operations (HERO), published by the Washington Hospitality Association.  Want a hard copy of the whole manual?  It’s one of the many benefits of becoming a member!  Find out more about joining the Washington Hospitality Association here.

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