Worker pay issues at end of employment

A recent ruling by the U.S. Court of Appeals for the Ninth

Circuit has impacted how employers can take pay deductions from terminated workers in California.

A major big box store chain voluntarily provided part of employee pay as a line of credit on a company-issued card.

When those workers ended their time at the company, the employer the outstanding balances on the cards from accrued

but unused sick leave and vacation time.

That action led to a lawsuit filed by the former employees based on state and federal Fair Labor Standards Act (FLSA)

requirements about the limiting of of employee wage deductions.

The FLSA provides a number of allowable situations that can result in reduced pay for employee attendance, but limits the

items to those specifically enumerated in the act.

The appeals court eventually ruled that the actions taken by the company did not violate the FLSA because the balance on the cards was legitimate and deducted from sick and vacation

pay.

They are not specifically protected from garnishment under the act.

The ruling begins to set a precedent.

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