Company making employees pay for shortages

I work in a cash advance place in Ohio. We deal with large amounts of money and are sometimes short at the end of the day balance. Our company makes us pay with our personal money to make up shortages. Is this legal?

1 answer  |  asked Apr 18, 2001 08:35 AM [EST]  |  applies to Ohio

Answers (1)

Richard Renner
Minimum wage and contracts for wages

This question raises two issues. First, consider the minimum wage. For workers covered by the Fair Labor Standards Act (FLSA), the employer can not reduce pay below the minimum wage.

Congress enacted the FLSA in order to correct conditions detrimental to the
maintenance of the minimum standard of living necessary for health, efficiency, and general well being of workers. Brennan v. Veterans Cleaning Service, Inc., 482 F.2d 1362, 1368 (5th Cir. 1973) (quoting 29 U.S.C.A. 202(a)). Thus, FLSA requires wages to be paid free and clear Whether in cash or in facilities, wages cannot be considered to have been paid by the employer and received by the employee unless they are paid finally and unconditionally or free and clear. The wage requirements of the Act will not be met where the employee kicks back directly or indirectly to the employer or another person for the employer's benefit the whole or part of the wage delivered to the employee. 29 C.F.R. 531.35.

When the employer is the creditor, payment may not be made by paycheck deductions which reduce net pay below minimum wage, even where the employee apparently consents to such an arrangement. Veterans Cleaning Service, 482 F.2d at 1370.

If the employer can prove that you took the money, you would normally expect to be fired. With such proof, the courts will permit the employer to claim that the employee essential got paid early through the stolen money. Otherwise, the FLSA or contract principles apply.

If the deductions do not bring the wages below minimum wages, then a court would have to look at the contract between the employer and the employee. If the employer had clearly communicated the policy before the pay period began, then the worker accepted the terms by continuing to work. This is so even if there is no evidence that the employee took any of the money. It is just part of the deal the worker can accept as part of the job. If the policy was announced when it was first implemented, then the employee has a breach of contract claim. The employer cannot change the rules of payment after the work is done. This type of claim is usually brought in small claims court. Under the FLSA, workers who sue and win can also recover their attorney fees. Workers with good claims can thus get employment lawyers to take their cases. If it is just a breach of contract claim, it is usually not worth the expense of hiring an attorney (although consulting one before filing may be wise and economical).

Let's look at a bigger picture. If you sue, your boss will not be happy. Will you be protected from retaliation? Yes, if you sued under the FLSA. If you sued only for the breach of contract claim, you would be protected from retaliation only if you are covered by the National Labor Relations Act (NLRA) and you sued "in concert" with other covered employees. The NLRA protects the right of covered workers to form unions. If you can form a union, you also have the right to engage in "concerted activity" -- that is two or more workers acting in concert to improve their wages, hours, or terms and conditions of employment. If two or more petitioned or sued together, they are protected. If you are acting alone, you are not protected.

If you are going to go through with this, why not organize a union? If you win, you get the protection of a union contract. If you lose, you are protected from retaliation under the NLRA.

The time limit for FLSA claims is two years. For NLRA claims, a charge must be filed with the NLRB (Cleveland or Cincinnati) within 180 days of the retaliation. For the breach of contract claim, the Ohio time limit is two years (even though suits under most other contracts can be brought up to six years later; fifteen years for written contracts).

If the FLSA is violated, you can also make a free complaint to the US Department of Labor (DOL), Wage and Hour Division. Don't expect a fast investigation, though.
If DOL finds a violation, they will order the employer to pay the back due wages. If you sue and win, you can ask for double damages and attorney fees.

posted by Richard Renner  |  Apr 18, 2001 11:03 PM [EST]

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