Can an Employer Deduct the Cost of Lost, Stolen, or Damaged Property from an Employee’s Wages?
Under Minnesota law, an employer generally cannot make a deduction, either directly or indirectly, from the wages due to or earned by an employee “for lost or stolen property, damage to property, or to recover any other claimed indebtedness running from employee to employer” unless one of the following two situations applies:
- After the loss occurred or the claimed indebtedness arose, the employee voluntarily authorizes the employer to make the deduction; or
- A court holds the employee liable for the loss or debt.
Minn. Stat. § 181.79, subd. 1(a). If the employee authorizes the deduction, that authorization must be in writing and must state the amount that will be deducted from the employee’s wages for each pay period that the deduction will apply. See id. If an employer violates this statute, it can be held liable for twice the amount of the deduction taken. Id., at subd. 2.
This statute does not apply when (1) an applicable collective bargaining agreement contains a contrary provision; (2) an employer of employees who are commissioned salespeople establishes rules with the purpose of disciplining the salespeople, by fines or otherwise, for errors or omissions in performance; or (3) an employee makes a purchase or receives a loan from the employer and voluntarily authorizes wage deductions for the cost of the purchase or the loan. Id., at subd. 1(c).
Takeaway: If an employee loses, steals, or damages property, a Minnesota employer should not unilaterally deduct the cost or value of the property at issue from the employee’s wages. To offset the loss against the employee’s wages, the employer may seek the employee’s consent to the deduction through a written authorization.