Payroll Deductions in Virginia

A question frequently posed to SESCO goes something like this ... "May we deduct money from an employee's wages to cover damages to company property?" or "May we take deductions from wages to cover cash register shortages?"

There are two sections of the Virginia Code relevant to the issue of payroll deductions:

Section 40.1-29(C) states:

No employer shall withhold any part of the wages or salaries of any employee except for payroll, wage or withholding taxes or in accordance with law, without the written and signed authorization of the employee.

Section 40.1-29(D) provides:

No employer shall require any employee, except executive personnel, to sign any contract which provides for the forfeiture of the employee's wages for time worked as a condition of employment or the continuance therein, except as otherwise provided by law.

When a Virginia employer is seeking wage deductions as reimbursement for damages, shortages, etc. we offer the following guidance:

- Except for deductions for payroll advances, any non-payroll deductions require the written and signed consent of the employee.

- The signed consent for deductions is valid only if the agreement is truly voluntary and not a condition of employment.

- Blanket authorizations signed by an employee at the commencement of employment which allow such deductions are considered per se a condition of employment and are not allowed according to Virginia law. Written authorizations must be truly voluntary (not a condition of continued employment) and must be given at a time concurrent with the reason for the wage deduction.

- A deduction from wages may not reduce an employee's pay below minimum wage. The only exception is deductions for monies already received by the employee (pay advances, personal loans, etc.).

A couple of examples will illustrate the acceptable practice:

An employer withholds a portion of an employee's earned wages to cover the cost of damages to a company vehicle wrecked by the employee. OR

An employer withholds a portion of an employee's earned wages to cover cash register shortages, breakage, etc.

In each situation, the deductions are not allowable if the employee was required to give blanket authorization for the deduction as a condition of employment.

On the other hand, these deductions are allowable if the employee voluntarily gave written permission for the deduction after the damage or shortage, and the deduction is a one time only arrangement and not a condition of employment. As noted above, the deduction from wages may not reduce the employee's pay below minimum wage.

SESCO Management Consultants is available to assist you with issues related to state and federal employment regulations. You may contact us by phone at 423-764-4127 or by e-mail at sesco@sescomgt.com .