An Administrator's Guide to California Private School Law

Chapter 6 – Wage And Hour Laws

automatic contribution arrangement unless the employee elects to not participate, and elects to receive cash payment. Under such an automatic contribution program, an employee will contribute unless the employee opts-out of the arrangement or specifies a different amount for the employee’s contribution. In order for a plan to qualify as an automatic contribution arrangement, the school’s plan must meet federal statutory requirements, including specified features to insure that the plan provides for automatic deferral of compensation, matching or non-elective school contributions, and specific notice to employees regarding the automatic contribution, including the right to elect to receive cash payment. B. R ECOVERY O F W AGES P AID I S I LLEGAL It is unlawful for any school to collect or receive from an employee any part of wages paid by the school to the employee. 729 1. S ELF H ELP B Y S CHOOL A school is prohibited from engaging in self-help to take back wages paid by the school to the employee either by deduction or recovery after payment of the wage. 730 Unless the employee agrees to the pay deduction, the school’s remedy is to pursue legal action against the employee. 2. L OSSES A S R ESULT O F N EGLIGENCE O R C OST O F D OING B USINESS Under California law, shortages and other losses that occur as a result of simple negligence may not be deducted from an employee’s wages. For example, if a coach accidentally drops a school- issued cell phone and breaks it, the school cannot deduct the cost of the phone from the employee’s wages. 731 While a school cannot deduct the loss from the employee’s wages, the school is not prevented from disciplining an employee who negligently causes a loss. 732 A school also may not threaten discharge if the employee refuses to allow a deduction. 733 Additionally, discharging an employee who complains about an illegal deduction constitutes a violation of public policy and the employee may sue for wrongful discharge. 734 3. L OSSES A S R ESULT O F D ISHONEST O R W ILLFUL A CT O F E MPLOYEE Schools are allowed to deduct for losses that occur as a result of a dishonest or willful act or through the gross negligence of the employee. 735 C. D EDUCTIONS F OR L OANS M ADE T O E MPLOYEES A school may deduct payment for loans made to an employee as long as the employee consents in writing. 736 However, the school may not “accelerate” payment of the balance upon termination. 737 For example, an employee borrows $2,000 to purchase a computer under the school’s computer loan program. The employee agrees to have $100 deducted from each paycheck to repay the loan. After making 10 payments, the employee abruptly quits. Under this scenario, the school may not deduct the remaining balance of $1,000 from the employee’s final paycheck unless the employee consents to the accelerated deduction. The only remedy for the

An Administrator’s Guide to California Private School Law ©2019 Liebert Cassidy Whitmore 193