In Wisconsin, if an employee caused damage to a customer’s vehicle, can we deduct the cost from the employee’s paycheck without special consent?
Short answer—no, the employer must have provided consent or some form of written agreement with the employee in order to deduct the cost of the damages form the employee’s paycheck.
Under Wisconsin law, it is unlawful for an employer to make deductions from an employee’s earned wages for “defective or faulty workmanship, lost or stolen property or damage to property” unless certain conditions are met.
Specifically, under Wisconsin law, one of the following three things must occur:
- Written Authorization: The employee authorizes the employer in writing to make the deduction;
- Mutual Determination: The employer and a representative designated by the employee—i.e., a union representative—determine that the defective or faulty workmanship, loss, theft, or damage is due to the employee’s negligence, carelessness, or willful and intentional conduct; or,
- Court Determination: The employee is found guilty or held liable in court for the negligence, carelessness, or willful and intentional conduct that caused the damage.
In the event of a disagreement between the employee and the employer, the employee may file a complaint for unpaid wages with the Wisconsin Department of Workforce Development.
The public policy goal of the Wisconsin law is to prevent the employer from arbitrarily deducting earned wages at its sole discretion.
Accordingly, a blanket policy that employees will be responsible for damage they cause is not sufficient to meet the above conditions. This is because the goal of the statute is violated by an employer who requires an employee to be bound by deductions before any damage occurs, or by an employer who requires an employee to agree to deductions and release all claims as a condition for receiving compensation without giving the employee an opportunity to challenge the deductions. Simply put, an employer may not deny an employee the right to disagree with his/her alleged fault for the particular incident of loss or damage.
Similarly, the statute seeks to prevent an employer from shifting the liability for the costs of operating a business, which are properly absorbed by the employer, to the employee.
It is important to note that the statute provides that if an employer makes an improper deduction from an employee’s wages, the employer is liable for twice the amount of the deduction.
In conclusion, in the original question above, an employer in Wisconsin could deduct from an employee’s paycheck the cost of damage to the vehicle caused by the employee if one of the three conditions laid out above is met. The employer is prohibited from making a unilateral deduction or making the deduction pursuant to a blanket policy.
Every state has different state employment laws, so if you are not in Wisconsin, your state laws may allow such deductions.
This article, slightly modified to note recent updates, was featured online in the Great Lakes Employment Law Letter and published by BLR®—Business & Legal Resources. Reproduced here with the permission of BLR®—Business & Legal Resources.