Keeping Your Business Legal

Carol Keough September 18, 2012

Some Deductions from An Employee Paycheck Are Illegal

The State of Texas protects employees under the Texas Payday Act from unfair actions by employers in paying or failing to pay employees.  An employee can go to the Texas Workforce Commission (TWC) and complain that he has not been paid all of his wages for the hours that he worked.  One of those complaints can be that an employer has taken deductions from his paycheck which he did not  authorize.  Look at the following factual scenario:

An employee is given a smart phone to make sales calls to potential customers.  The employee is using the phone and spills a coke on the phone.  The phone stops working.  The employer is angry that the phone is destroyed and tells the employee that he will have to pay for the phone from his next paycheck.  The employee refuses to agree that he should pay for the phone.  The employer deducts the  cost of the phone from the employee’s paycheck  anyway.  The employee goes to the TWC.  Who will the TWC side with?

The employee wins.  Why?  The Texas Payday Act requires that  an employer must have a written authorization from the employee to take deductions from the employee’s paycheck.

Tip for the Employer : When you hire an employee obtain a written authorization to make certain deductions from the employee’s paycheck including  the cost of equipment that the employee damages.


From the desks of Carol Keough and Trisha Barita

Lawfirm of Coats/Rose

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