Payroll Deductions
fizzbizz
5 Posts
I have a question that I hope someone can answer for me. I'm the cashier for one warehouse of a beverage bottling/distributing company. I do local reconciliation of the delivery routes and serve as point-of-contact between the delivery drivers and the corporate office.
One of my duties is to write RSAs (Route Salesman Adjustment) if a driver is short on money or product, and the driver must sign it. I don't have a problem with this - - up to this point I haven't had this occur. The accounting department in the corporate office, however, uses these RSAs to charge everything possible back to the drivers. If there is no store stamp on an invoice, the driver is held responsible for it until it is paid. If a company short-pays an invoice, the difference is charged back to the driver. If a check is returned, it's charged back to the driver until he collects for it. If there's a pricing issue, the difference is charged back to the driver. The forms are completed at the corporate office and faxed to our warehouse - - apparently no driver signature is required.
Up to now, I have refused to write RSAs for these things for which the driver is not responsible, or which can be easily corrected. It's my personal belief that the majority of the RSAs written are unfair at the very least, if not totally illegal. The corporate office has begun insisting that I write the RSAs at the local level so they don't have to do it. I suspect they're needing the drivers' signatures before they can legally withhold these things from their paychecks.
Do I have any grounds for refusing to write these RSAs? I would appreciate any input from someone who knows more about the laws than I.
Comments
First question, what state are you in?
The US Dept of Labor states:
Employers at times require employees to pay or reimburse the employer for other items. The cost of any items which are considered primarily for the benefit or convenience of the employer would have the same restrictions as apply to reimbursement for uniforms. In other words, no deduction may be made from an employee's wages which would reduce the employee's earnings below the required minimum wage or overtime compensation.
Some examples of items which would be considered to be for the benefit or convenience of the employer are tools used in the employee's work, damages to the employer's property by the employee or any other individuals, financial losses due to clients/customers not paying bills, and theft of the employer's property by the employee or other individuals. Employees may not be required to pay for any of the cost of such items if, by so doing, their wages would be reduced below the required minimum wage or overtime compensation. This is true even if an economic loss suffered by the employer is due to the employee's negligence.
Employers may not avoid FLSA minimum wage and overtime requirements by having the employee reimburse the employer in cash for the cost of such items in lieu of deducting the cost from the employee's wages.
Typical Problems
(1) A minimum wage employee working as a cashier is illegally required to reimburse the employer for a cash drawer shortage. (2) An employer improperly requires tipped employees to pay for customers who walk out without paying their bills or for incorrectly totaled bills. (3) An employer furnishes elaborate uniforms to employees and makes them responsible for having the uniforms cleaned. (4) An employee driving the employer's vehicle causes a wreck, and the employer holds the employee responsible for the repairs, thereby reducing the employee's wages below the minimum wage. (5) A security guard is required to purchase a gun for the job, and the cost causes him/her to not earn the minimum wage. (6) The cost of an employer-required physical examination cuts into an employee's minimum wage or overtime compensation.
MD state law prohibits employers from wage deductions other than :
1. A court has ordered or allowed the employer to make the deduction. Examples include court ordered wage garnishments and orders to pay child support.
2. The Commissioner of the Maryland Division of Labor and Industry has allowed the deduction to offset or "pay for" something of value the employee has received. Examples include long distance telephone calls on the employer's business phone, personal loans, wage advances, etc.
3. Allowed by some law or regulation of the government. Examples include state and federal taxes.
4. The employee has given express written authorization to the employer to make the deduction. This should take the form of a separate and distinct statement, signed by the employee, concerning only the deduction and nothing more. Even with a proper authorization, however, employers must still pay at least the federal minimum wage in the case of a deduction made to offset a loss to the employer due to the admitted or court determined fault or negligence of an employee (for example, careless damage to the employer's truck). If the deduction is made to offset something the employee received or retained from the employer which had monetary value (for example, personal loan, use of long-distance telephone line, materials, etc.), the deduction may, in that case, reduce the employee's wages below the minimum wage. Finally, an authorized deduction may be invalid if it violates or is inconsistent with other federal or state laws or regulations.
Furthermore, if you discover that this practice is in fact illegal and you refuse to participate in this practice then they, in turn, terminate your employment for refusal, then you could be looking at a wrongful discharge claim.
Texas payday law:
Deductions from Wages
One of the most troublesome aspects of determining what wages are due and unpaid is the question raised by deductions from wages made by the employer. The employer may not make deductions unless ordered to do so by a court of competent jurisdiction (as in court-ordered child support payments); authorized to do so by state or federal law (as in IRS withholding); or authorized in writing by the employee, and then only for a lawful purpose.
The latter category is the one that causes many problems. Authorizations that are too general or too broad may not be given effect.
Deductions for out-of-pocket loans to an employee, even though there is an oral agreement to repay, or even to repay out of a particular wage payment, will not be allowed, unless the deduction is authorized in writing.
Employers must be careful to get a proper written authorization before making a payroll deduction.
This is basically the same as Maryland law. So, unless the employee authorizes the deduction the employer cannot withhold from their wages.
I hope this helps. If you need any more information, let me know.
Texas Labor Code:
Sec. 61.018. DEDUCTION FROM WAGES. An employer may not withhold or divert any part of an employee's wages unless the employer:
(1) is ordered to do so by a court of competent jurisdiction;
(2) is authorized to do so by state or federal law; or
(3) has written authorization from the employee to deduct part of the wages for a lawful purpose
Hope this helps
Texas Labor Code:
Sec. 61.018. DEDUCTION FROM WAGES. An employer may not withhold or divert any part of an employee's wages unless the employer:
(1) is ordered to do so by a court of competent jurisdiction;
(2) is authorized to do so by state or federal law; or
(3) has written authorization from the employee to deduct part of the wages for a lawful purpose
Hope this helps[/quote]
TWC actually has a sample agreement you can use for deducting for things like cash drawer shortages. Texas is pretty open on this as long as the agreement is in place prior to the cause of the need for a deduction. However, it's not clear to me that everything you are talking about are things to which drivers can agree. For example, you can't sign away your right to OT if you are non-exempt. Are you certain the drivers are employees? Drivers in some industries work as contractors and are responsible for sales and other functions as well.
Thanks for responding. The authorization to deduct from wages, I think, is the main issue. All drivers are employees of the company, paid an hourly wage. What I'm not clear on is whether the deductions are covered by the blanket authorization included in the new hire documentation, or if each amount must have a specific, signed authorization.
I believe the original intent of these forms was to prevent theft and to insure the drivers would be very careful about turning in the day's receipts. Logical, intelligent policy for the company to have in place. My issue is with the items charged to the drivers that are beyond their control; i.e., pricing differences, returned checks, short-paid charge invoices, etc. The forms which state these amounts will be deducted from their paychecks are not signed by anyone but the person in the corporate office who completes them.
Thanks for responding. The authorization to deduct from wages, I think, is the main issue. All drivers are employees of the company, paid an hourly wage. What I'm not clear on is whether the deductions are covered by the blanket authorization included in the new hire documentation, or if each amount must have a specific, signed authorization.
I believe the original intent of these forms was to prevent theft and to insure the drivers would be very careful about turning in the day's receipts. Logical, intelligent policy for the company to have in place. My issue is with the items charged to the drivers that are beyond their control; i.e., pricing differences, returned checks, short-paid charge invoices, etc. The forms which state these amounts will be deducted from their paychecks are not signed by anyone but the person in the corporate office who completes them.
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A specific, signed document for each driver would be best. I've never seen anybody do payroll deductions of this nature based on a blurb in a handbook or anything like that. Remember, the handbook is NOT a contract, but the authorization to deduct IS, so they can't both be in the same document, unless you want to be in the uncomfortable position of suggesting that there are contracts in your handbook...
Returned checks and the like cannot be deducted from an employee's check, even if they authorize it. Like OT, that can't be signed away. Perhaps if the Company can show that the employee colluded with the client to defraud the company out of product but, otherwise, no.
I want to thank you two for attempting to help me on this. I guess I'm not communicating the situation very well since I don't know much more than when I started. We'll probably have to wait until one of the drivers sues the company over these RSAs to get any clarification - - we've already had several good employees leave because of them.
Keep up the good work and thanks again.