top of page
  • Writer's pictureFounder 100 Magazine

Legal Implications of Companies Taking Money from Employee Checks for Cash Register Shortages

Cash register shortages can occur in retail and service industries due to various reasons, such as human error, theft, or technical glitches. In some cases, companies may consider recovering the lost money by deducting the amount from their employees' paychecks. However, the legality of this practice is a matter of concern and requires a thorough examination of labor laws and regulations. In this article, we will explore whether it is legal for companies to take money from employee checks to compensate for cash register shortages.

Understanding Wage Deductions:

Wage deductions generally refer to any withholding, offsetting, or reduction made by an employer from an employee's paycheck. These deductions can be lawful or unlawful, depending on the jurisdiction and the specific circumstances. It is crucial to differentiate between permissible wage deductions and those that violate labor laws.

1. Consent and Voluntary Deductions:

In some cases, employees may give their consent to have deductions made from their wages. This can occur when an employee knowingly and voluntarily agrees to such a deduction through a written agreement or a collective bargaining agreement. In such instances, deductions for cash register shortages may be considered legal, provided the employee has willingly consented.

2. Unlawful Deductions:

However, it is important to note that in many jurisdictions, employers are prohibited from making deductions from an employee's wages for losses or cash register shortages when the employee is not at fault. This is because wage deductions should generally be limited to statutory requirements, tax withholdings, and other authorized deductions such as health insurance premiums or retirement contributions.

Labor Laws and Employee Protections:

Labor laws and regulations vary from country to country and even within different states or provinces. It is crucial for both employers and employees to be aware of the applicable laws in their jurisdiction. Some legal considerations regarding wage deductions include:

1. Fair Labor Standards Act (FLSA):

In the United States, the Fair Labor Standards Act (FLSA) sets forth the federal guidelines for wage deductions. Under the FLSA, employers are generally prohibited from making deductions that would reduce an employee's wages below the minimum wage or overtime pay requirements. Cash register shortages are typically considered an employer's business loss, and it is unlawful to deduct these losses from an employee's paycheck.

2. Employment Contracts and Collective Bargaining Agreements:

In certain situations, employment contracts or collective bargaining agreements may allow for wage deductions in specific circumstances. It is essential to review the terms and conditions outlined in such agreements to determine whether deductions for cash register shortages are allowed.

3. Employee Rights and Protections:

Most jurisdictions have labor laws in place to protect employees from unfair practices. These laws often prohibit employers from making unauthorized wage deductions, particularly when the employee is not responsible for the cash register shortage. Employees are typically encouraged to familiarize themselves with their rights and seek legal advice if they believe their employer has made an unlawful wage deduction.

While practices regarding wage deductions can vary depending on the jurisdiction and specific circumstances, it is generally considered illegal for companies to take money from employee checks to compensate for cash register shortages. In most cases, employers are responsible for managing cash register discrepancies as part of their business operations. If you believe your employer has made an unlawful wage deduction, it is advisable to consult with a labor law attorney or relevant labor authorities to understand your rights and potential recourse.


bottom of page