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February 15, 2011
Can an Employee Agree to a Wage Deduction Instead of Discipline?

When employees are at fault in a truck accident at work, their employer gives them the option of accepting discipline or agreeing to set off the damages against their wages. The Massachusetts Supreme Judicial Court recently considered whether this policy violated the Wage Act.

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What happened. ABC Disposal Service (ABC) employs truck drivers to pick up trash and recyclables. If a truck driver was in an accident causing damage to the truck or other property, a safety officer and ABC management would determine whether the accident was “preventable.” If so, the driver could choose either discipline or to set off his or her wages against the damages. For employees choosing the set-off, the average deduction from wages was $15 to $30 dollars per week. No driver’s pay fell below minimum wage.

After the Attorney General audited ABC, she issued a civil citation, finding that its set-off policy violated the state’s Wage Act. On appeal, the trial court ruled in favor of ABC, and the Attorney General appealed that ruling. The Supreme Judicial Court agreed to decide the case.

What the court said. The Act states that employers may not enter “special contracts” to avoid their obligation to pay employees all wages earned. However, employers may make certain deductions, including those for a “valid set-off.”

ABC contended that because employees voluntarily agreed to make repayments through wage deductions, they gave up no statutory right to wages and there was no special contract. The court rejected that argument, noting that the statute contained no exception for special contracts with an employee’s assent. Therefore, regardless of any wage deduction agreement with an employee, employers are prohibited from deducting or withholding any earned wages, unless otherwise permitted by the Act.

ABC next argued that its wage deductions were valid setoffs. The court explained that a valid set-off exists when there is a “clear and established debt” owed to the employer. ABC asserted that the deductions met this standard since a thorough investigation made findings of fault before a set-off agreement was offered to an employee. The court disagreed, noting that ABC made a unilateral assessment of liability and damages, and there was no opportunity for the employee to appeal that assessment. This, the court ruled, could not constitute a clear and established debt, such as one determined by a court. Camara v. Attorney General, Massachusetts Supreme Judicial Court, No. SJC-10693 (1/25/11).

Point to remember: Employers must be cautious when making wage deductions, even with an employee’s consent. A court will examine deductions in light of the law’s language and its purpose to protect employees and their right to receive their wages.

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