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Serving: WI
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KNOW EXCEPTIONS: Wisconsin law prohibits an employer from making deductions from the earned wages of an employee unless one of three exceptions apply.

Can you legally dock pay?

Legal Matters: Ag employers should use caution if docking an employee’s pay.

Whether or not you can legally dock an employee’s pay is a question agricultural employers often ask. The need to answer this question could arise if an employee negligently or willfully damages or fails to return the property of the employer. This question may also arise in other contexts and situations. However, whether an ag employer can legally dock the pay of an employee requires a review of the relevant federal and state employment laws.

Under federal law, the Federal Labor Standards Act does not prohibit an employer from docking the wages of an employee who is not exempt from the minimum wage and overtime requirements for damages, disciplinary reason or for other reasons not prohibited by law. However, if the employee is exempt from the minimum wage and overtime requirements under FLSA (e.g., the employee is salaried), docking the employee’s wages is generally prohibited, except in specific factual circumstances.

Wisconsin Statute 03.455 prohibits an employer from making deductions from the “earned wages” of an employee for “defective or faulty workmanship, lost or stolen property” unless one of three exceptions apply.

The first exception authorizes an ag employer to deduct a loss if the employee agrees in writing that the employer can make the deduction. Therefore, an ag employer may be tempted to require employees to sign a blanket authorization at the commencement of employment that authorizes the employer to make such deductions. However, the Wisconsin Supreme Court has made clear that a blanket authorization is not permitted, and an employer may rely on the exception only if the employee consents to the deduction after the loss and prior to the employer docking the employee’s paycheck. 

The second exception authorizes an ag employer to deduct a loss if the employer and the employee’s representative determine that defective or faulty work, loss or theft, or damage is the result of the employee’s negligence, carelessness, or willful and intentional conduct. As with the first exception, the agreement between the employer and the employee’s representative to permit the deduction from the employee’s paycheck would need to occur after the conduct giving rise to the deduction and prior to the employer docking the employee’s paycheck.   

The third exception authorizes an ag employer to deduct a loss upon the finding of a court of competent jurisdiction that the employee is guilty or held liable for the loss by reasons of the employee’s negligence, carelessness, or willful and intentional conduct. This exception may be preferable to the ag employer. It provides certainty that the employer is permitted to dock the employee’s paycheck, and the court’s judgment would be enforceable by the employer through the court system if the employee’s employment is terminated prior to repayment of the full amount to which the employer is entitled.

Use caution

An agricultural employer in Wisconsin must comply with the requirements of the more stringent of the federal or state law. Therefore, an ag employer in Wisconsin should not dock an employee’s paycheck unless one of the previously mentioned three exceptions apply.

If an ag employer docks an employee’s pay without the legal authority to do so, the statute provides that the employee can recover “twice the amount of deduction or credit taken in a civil action brought by the employee.” Therefore, an ag employer in Wisconsin should tread lightly when considering docking an employee’s pay. 

Mayer is a partner in the agricultural law firm of Twohig, Rietbrock, Schneider and Halbach. Call him at 920-849-4999.

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