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Jan24

Reduction in Pay

I work for a contracting company that supplies all of our employees with a vehicle and tools to complete their jobs. When an employee quites we go through and verify that all the equipment is returned and if not, we have the employee sign a payroll deduction form to collect for the lost equipment. But if an employee refuses to sign the form, my Office Manager directs our payroll clerk to lower the employees wage to minimum wage to collect for the lost equipment. I as the HR rep does not believe that this is legal and have said so to the Office Manager and her comment is we are legally only obligated to pay minimum wage, therefore we are doing nothing wrong. I have looked all over and cannot find anything stating that is the State of Wisconsin, and employer can or cannot reduce an employees wage without notice. Does any one know if this is illegal or not, and where I can find documentation support either?

Your concerns are completely justified. In Wisconsin, as in other states, an employee's wages cannot be retroactively reduced. In other words, an employee who believed he was working for $15 per hour last week cannot suddenly be paid the minimum wage for that time. The employer has the right to reduce an employee's wages, but the employee must be informed before the work is performed, of the new rate of pay.

This is covered under the Wisconsin Wage Payment and Collection Law, which requires the employer to pay employees “all wages earned” for the payroll period. The law does not just require that employees be paid the minimum wage, but all wages earned. An employee who was terminated and not paid his full wages could file a wage complaint with the Wisconsin Department of Workforce Development. They would force the company to pay the wages, and possibly penalties and interest as well.

The current procedure is correct. In Wisconsin, you cannot make a deduction for lost or missing items unless the employee authorizes it in writing, after the event occurs. If an employee fails to pay for missing tools, or to sign a payroll deduction, you can call the police and have him charged with theft, but you cannot make a deduction to his paycheck or reduce his wages.

Read more about the Wisconsin Wage Payment and Collection Law at: http://dwd.wisconsin.gov/er/labor_standards_bureau/publication_erd_8784_pweb.htm#1 Wage
http://dwd.wisconsin.gov/er/labor_standards_bureau/publication_erd_8784_pweb.htm#5 Deductions

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This entry was posted on Monday, January 24th, 2011 at 10:13 am and is filed under
Human Resources Management, Termination.
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