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By: Kun Zhao, Esq.

During the employment relationship, employer and employee may encounter wage payment issues, especially when employer is a small business. Under what circumstances an employer can deduct from employee’s wages and how wage dispute should be dealt with properly are often at issue. Employers are often confronted with the issue of whether employees must be reimbursed for certain expenses or for economic loss or damage purportedly sustained by employees.

New Jersey law is very strict as to what may be deducted from employee wages. Other than very limited situations where the employer is allowed to deduct monies for the benefit of the employee, such as employee-authorized contributions to employee welfare, insurance, pension, retirement plans, etc., an employer may not withhold, deduct, or divert any portion of an employee’s wages.

Employers may not deduct wages for the purchase of necessary items for employment, such as tools, uniforms or clothing.  However, with employee consent, employers may deduct wages for the rental or cleaning of required uniforms or clothing. Employers are not allowed to withhold or deduct employee wages even when employees damage employer property or when employees steal employer funds. If an employer suffers losses due to employee misconduct and cannot resolve the matter with the employee, it should seek judicial relief rather than engaging in self-help measures that may be illegal.

Additionally, in the event of disputes over the amount of wages between an employer and employee, the employer is required by law to timely pay, without condition, all wages, or parts thereof, conceded by him to be due, leaving to the employee all remedies to which he might otherwise be entitled as to any balance claimed. The acceptance by an employee of a payment of the conceded amount does not constitute a release as to the balance of any claim. Any release required by an employer as a condition to payment is null and void.

Therefore, when dealing with wage issues with employees, employers should be very careful to comply with state and federal laws to avoid unnecessary state investigations and penalties due to violations.