Can we deduct an employee’s theft of cash from her paycheck?

Can we deduct an employee’s theft of cash from her paycheck?

Q: We recently fired an employee for stealing money out of our cashbox. Initially, she denied stealing anything and tried to point the finger at another employee. She didn’t realize we had a security camera. When we brought the employee in and showed her the tape of her removing the money, she screamed at us and left the building. We’d ordinarily issue her a check today. Can we deduct what she stole from her final paycheck?

A: No, not unless your employee agrees. The federal Fair Labor Standards Act and state minimum wage laws require that employers pay employees for all hours worked. The FLSA doesn’t exempt employees who behave badly, violate company policy or commit crimes against the employer. Even if a court finds your employee guilty, you don’t have the right to withhold earned wages, even those earned in the hours during which she stole.

You can, however, give your employee the option of either voluntarily paying back what she stole or facing prosecution. The Alaska statute governing wage deductions, 23.10.085 (c) doesn’t limit an employer’s right to enter into a written agreement with an employee to deduct money the employee owes the employer. It does prohibit an employer from requiring or inducing (through force, intimidation or threat of dismissal) an employee to return or give up any part of the compensation to which the employee is entitled.

Additionally, employers can’t reduce an employee’s wages below minimum wage for theft or cash shortages unless the employee admits, willingly and in writing, to having personally taken the specific amount of cash alleged to be missing.

You can, of course, turn your former employee over to the police or pursue recovery and damages in civil court.


© Dr. Lynne Curry is author of “Beating the Workplace Bully” and “Solutions” as well as Regional Director of Training and Business Consulting for The Growth Company, an Avitus Group Company. Follow her on Twitter @lynnecury10 or at

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