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Can We Deduct the Cost of Replacing the Broken Items From their Paychecks?

Question: Some of our employees have been careless on the job and broken company property. Can we deduct the cost of replacing the broken items from their paychecks?

Answer from Monica, SPHR, SHRM-CP: Probably not. Many states have imposed significant limitations on what kinds of things employers can take a deduction for, and often the deduction also requires employee consent. In addition, most deductions that would take an employee below minimum wage would violate federal and state wage and hour laws. Further, deducting from an exempt employee’s salary in such an instance violates the salary basis requirement under the Fair Labor Standards Act (FLSA). Instead, we recommend addressing the carelessness as a performance concern. Document the occurrence and, if warranted, pursue corrective action. Repeat offenses may result in termination of employment.

Going forward, make sure you address this issue in a consistent manner. Update your policies if they aren’t already clear about what happens when an employee damages company property (discipline eventually follow by termination, but not deductions). That way everyone knows what to expect, there are no surprises, and no one has grounds to say they’re being treated unfairly.

Monica has held roles as an HR Generalist and Payroll and Benefits manager at a large ski resort, providing HR guidance to more than 500 employees. She also has HR experience in the healthcare field and the non-profit world. Monica holds a Bachelor of Science degree from Linfield College.


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