Before paycheck deduction, Wisconsin employers should know the rules

An employee damages company equipment. A cash drawer comes up short. Company property disappears. An employer may understandably believe the simplest solution is to deduct the loss from the employee’s next paycheck. In Wisconsin, however, state law significantly restricts an employer’s ability to make such deductions.

When is a wage deduction restricted?

Unless a statutory exception applies, Wisconsin law prohibits an employer from deducting from an employee’s earned wages for:

• Defective or faulty workmanship;

• Lost or stolen property; or

• Damage to property.

One common way to satisfy the statute is for the employee to authorize the deduction in writing. But timing matters.

According to the Wisconsin Department of Workforce Development, the employee’s authorization must be obtained after the loss occurs and before the deduction is made. You generally cannot rely on a blanket authorization signed at hiring that permits deductions for any future damage or shortages.

For example, suppose an employee damages a piece of company equipment. Even if you believe the employee was clearly responsible, you shouldn’t subtract the repair cost from the employee’s next paycheck simply because the employee signed a general payroll-deduction provision at hiring.

What if the employee won’t authorize the deduction?