Docking an employee’s pay not usually legal

Even a written agreement allowing it might not be enough

Docking an employee’s wages for missing money or faulty work, while tempting for an employer, is not usually legal.

That’s because employment standards legislation across the country generally prohibits the practice. Earlier this year the British Columbia government gave employers a stern warning that the practice was illegal after a gas-station attendant was killed while trying to stop a driver who took off without paying for $12.30 worth of gas.

The worker, who was dragged under the car for more than seven kilometres, had apparently been fired from a previous job after his employer docked his wages for a similar “gas-and-dash.”

There are instances where an employer can recover the costs of doing business from an employee, though there usually has to be an agreement in writing. A recent decision by the New Brunswick Labour and Employment Board, involving a bartender who came up short on two occasions, shows that even a written agreement might not be enough to justify deductions.

Jennifer Smith worked as a bartender and cashier at Dooly’s in Grand Bay, N.B. She was suspended and subsequently fired after the employer discovered a shortage of $1,000 on Oct. 25, 2004. A week earlier she had been $300 short. Smith’s employer withheld her last paycheque - in the amount of $307.09 - as compensation for the shortfalls.

Smith denied responsibility for both shortages. An employment standards officer investigating the case concluded that people other than Smith had access to the cash on the dates in question. There were two cash tills located in the bar - one for the food and drink sold to customers and a second for revenue from the gaming machines.

Smith’s duties required her to occasionally leave the bar where the tills were located to clean tables and restock the bar. When she left the bar, the till with the gambling revenue was locked and a key was left between the two registers.

When the $300 went missing, Smith suggested her employer call the police. The employer did not, but told Smith the $300 would be deducted from her wages. On the second occasion, when $1,000 went missing, Smith expressed disbelief because everything had balanced out and the money had been placed in a locked room. This time Smith phoned police herself to report the missing money.

The employer said it believed it had the authority to withhold the last paycheque as compensation for the missing money. It pointed to an employee agreement form, signed by Smith when she started that said:

“If a shortage occurs, full payment is due immediately. If for any reason this agreement cannot be met, I authorize Dooly’s of Grand Bay to deduct the shortage in full from my next pay.”

Smith said she didn’t believe this provision applied in the event someone else had access to the till or in the event the shortage was as a result of theft.

In deciding the case, the board turned to Hutchins v. Atlantic Provincial Security Guard Service Ltd., a ruling it made in 1995. In that case the board said the written agreement must be clear, specifically allow the deduction in question and be supported by a system which clearly allows the employee to be identified as being clearly responsible for the loss.

The board said it was apparent that on the two occasions in question, people other than Smith had access to the cash. In fact, just before the board made its decision, the police said another person admitted to the theft of the $1,000.

“The jurisprudence imposes a very high standard on employers who seek to make deductions from pay without the consent of the employee,” the board said.

“The employer must establish that the employee was responsible for the loss and agreed to the deduction. In the present case, nothing can be found to suggest any clear agreement to the deduction, or that (Smith) volunteered the deduction. She had no choice when informed by the employer that such a deduction would be made.”

It ordered Dooly’s to give Smith her final paycheque.

For more information see:

Smith v. 502130 N.B. Ltd., 2005 CarswellNB 267, 2005 WL 1177270 (N.B. Labour & Employment Bd.)

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