Can I Charge an Employee for Breaking Something?

by Genevieve Van Wyden, Demand Media
You can charge an employee for broken equipment under some circumstances.

You can charge an employee for broken equipment under some circumstances.

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As an employer, you spend money to buy equipment to run your business, whether it's a catering company, resume writing service or landscaping firm. Because you are using your own money or money you obtained through a loan, you want to make sure your equipment is properly treated so it will last as long as possible. If you have an employee who breaks equipment, either through negligence or willfulness, you need to know how to recoup your loss.

Federal and State Law

You can require an employee to reimburse you for broken equipment -- with some limitations. If the employee who broke a piece of equipment earns minimum wage, you cannot deduct anything from his pay, because that would drop his hourly pay below the federal minimum wage.

If your employee breaks a piece of equipment, such as a leaf blower, and you need to recover the cost of the item, you should have a signed authorization from this employee, so you can take the deduction from his paycheck. Your employee must make more than the federal minimum wage, which allows you to deduct the cost of the equipment from his check -- as long as doing so does not drop his hourly pay below the federal minimum wage.

Prove Breakage

Before you begin making deductions from your employee's paychecks, you have to be able to prove that he was definitely at fault. If your employee was working on a customer's yard when he broke the leaf blower, your customer can tell you how the employee was using the leaf blower.

You have a much stronger case for charging your employee for breaking the leaf blower if you saw him using it incorrectly. If you saw this, you can make deductions from his paychecks until the blower is paid off, states the HumanResourcesBlog.

Salaried Employees

If your business suffers a monetary loss because a salaried employee breaks a piece of equipment, you cannot deduct charges from his paycheck to cover the cost of the equipment, according to Richard D. Alaniz on the Business Fleet website. Because your employee is salaried, he is receiving a regular, predetermined salary on a "guaranteed basis." Making regular deductions from his salary drops his salary below the level agreed upon, according to the U.S. Department of Labor.

One State's Example

Employers in California may only deduct damages from an employee's paycheck for breakage, cash shortages and equipment loss caused by the employee's gross negligence or a deliberate, dishonest act.

Lost and damaged equipment is considered part of the cost of doing business in California. As such, an employer can only deduct for equipment loss if he is able to prove his employee caused the loss deliberately or by acting in a negligent manner.

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