My Employee Did Something Careless That Cost My Company Money. In New Jersey, May I Deduct The Company’s Loss From My Employee’s Paycheck?

No. In New Jersey, a company may not deduct monetary losses to the company, for which the worker arguably was at fault, from the worker’s paycheck. For example, if an employee gets parking tickets while driving a company car for business, the company may not deduct the parking fines from the employee’s paycheck.

Similarly, an employer may not withhold, from a cashier employee’s paycheck, a shortage in a cash register. However, in general, if the employee is at-will, then the company may fire him for causing the company a loss.

In general, under the New Jersey Wage Payment Law, N.J.S.A. § 34:11-4.1 et seq. (the “Wage Payment Law”), an employer may not “withhold or divert any portion of an employee’s wages unless . . . the employer is required or empowered to do so” by State or federal law. N.J.S.A. § 34:11-4.4, 34:11-4.4(a).

It is lawful for an employer to withhold or divert a portion of an employee’s wages for purposes specifically authorized by the Wage Payment Law. These allowable purposes do not include reimbursing the employer for monetary losses which arguably were the worker’s fault. So, for example, permissible purposes for withholding or diverting part of an employee’s wages do not include reimbursing the employer for parking fines incurred by an employee, or for a shortage in a cashier employee’s cash register.

Rather, purposes for which the Wage Payment Law allows an employer to withhold or divert a portion of an employee’s salary include, among other purposes:

• Contributions authorized under a collective bargaining agreement (a “CBA”), or by the worker in writing, to medical plans, pension plans, IRAs, or the like for the worker, his spouse, or both;
• Contributions authorized under a CBA, or by the employee in writing, for payment into a company-operated thrift plan, or a security option or security purchase plan to buy securities of the employing corporation;
• Payments authorized by employees for payment into employee personal savings accounts and the like, provided that all such deductions are approved by the employer;
• Payments for company products purchased pursuant to a periodic payment schedule contained in the original purchase agreement, if approved by the employer;
• Contributions authorized by employees for “organized and generally recognized charities,” provided the deductions for such contributions are approved by the employer;
• Payments authorized by employees or their collective bargaining agents for the rental of work clothing or uniforms or for the laundering or dry cleaning of work clothing or uniforms, provided the deductions for such payments are approved by the employer;
• Labor organization dues and initiation fees, and other labor organization charges permitted by law;
• Contributions authorized in writing by employees, under a CBA, to certain political committees or continuing political committees established by the employees’ labor union;
• Contributions authorized in writing by employees to certain political committees or continuing political committees, other than those established by the employees’ labor union;
• Payments authorized by employees for employer-sponsored programs for the purchase of insurance or annuities on a group or individual basis; and
• Other contributions, deductions and payments which New Jersey’s Commissioner of Labor may authorize by regulation “as proper and in conformity with the intent and purpose of” the Wage Payment Law, if such deductions are approved by the employer.

See N.J.S.A. § 34:11-4.4(b). However, in the absence of a contract, a company in New Jersey may fire its employee for causing the company a loss, carelessly or otherwise. So, for instance, an employer may fire a worker for incurring parking tickets while using a company car for business.

A company has this autonomy to fire because, in the absence of a contract, employment in New Jersey is at-will. In New Jersey, an at-will employee is subject to termination for any reason or no reason, unless (i) the discharge is for a reason prohibited by statute or (ii) the discharge is contrary to a clear mandate of public policy.