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In MA a wage violation carries a treble damages penalty making it especially difficult for employers to make wage deductions.  Employers must understand the guidelines around making wage deductions before doing so, as the penalty can far outweigh the payback. What can you and can’t you deduct from an employee’s paycheck?  The MA Supreme Judicial Court (SJC) recently made this question even harder to answer with their ruling in the Camara vs. SJC case.  In this case, the employer implemented a company policy which allowed employees, who were determined to be at fault for causing damage to company trucks or customer’s personal property, to choose between accepting disciplinary action or a wage deduction to help off set the costs.  The determination of fault was made solely by the employer and was not subject to appeal.

In this case, the employee agreed to the wage deductions, however, the determination of fault was the company’s decision without due process and what seems to be limited input from the employee.  The SJC position, citing the Wage Act, found that, “regardless of an employee’s agreement, there can be no deduction of wages unless the employer can demonstrate, in relation to that employee, the existence of a valid attachment, assignment, or setoff ….”  The SJC also ruled that the employer’s policy was a “contract” and in violation of the wage act.  In its ruling, the SJC provided examples of allowable wage deductions, limiting the scope by which an employer can make such deductions.

The end result of this ruling is that employers need to be conservative when making any deductions from an employee’s paycheck, other than those required by law (tax withholdings, garnishment, etc) or those not authorized by the employee and related to the company’s employee benefit plan.  An employer can find themselves getting into trouble for making deductions for paying back tuition, negative vacation balances or company property, even with a prior agreement or in a termination agreement.  Before making such deductions, the employer should fully understand the provisions to making such deductions to avoid future penalties.