318 | 2025 Cal-Peculiarities ©2025 Seyfarth Shaw LLP www.seyfarth.com 356 Lab. Code § 224 (arguably suggesting that any valid deduction must be authorized by state or federal law or expressly authorized in writing by the employee, or in a collective bargaining agreement, to cover health or pension plan payments). Two cases indirectly support this view: Hudgins v. Neiman Marcus Grp., Inc., 34 Cal. App. 4th 1109 (1995) (suggesting without deciding that Labor Code itself bars deductions for innocently caused business losses); Quillian v. Lion Oil Co., 96 Cal. App. 3d 156 (1979) (applying anti-deduction rule to gas station store manager without addressing whether manager was exempt, on apparent assumption that Labor Code provisions discussed in Kerr’s Catering directly bar deductions for business losses, rather than simply authorize the IWC to issue Wage Orders against those deductions). 357 IWC Wage Orders § 9. 358 IWC Wage Orders § 9; DLSE Enforcement Policies and Interpretations Manual § 45.5.5 (2002). 359 See Dep’t of Indus. Rels. v. UI Video Stores, Inc., 55 Cal. App. 4th 1084, 1088 (1997) (Blockbuster Video settled action brought by DLSE alleging that dress code requirements for its 1,914 employees violated section 9(A) of Wage Order 7). 360 Thai v. Int’l Bus. Machines Corp., 93 Cal. App. 5th 364 (2023), review denied (Oct. 11, 2023). 361 Lab. Code § 222.5. 362 Barnhill v. Robert Saunders & Co., 125 Cal. App. 3d 1 (1981) (employers may not seek self-remedies not available to other creditors). The DLSE has opined that employers may take deductions to recover debts owed them, “provided that the amount of the deduction from any one paycheck cannot exceed the amount authorized by the employee for any such deduction, and that after making any such authorized deduction, the employee must still receive no less than the minimum wage[.]” DLSE Opinion Letter 1999.09.22–1 at 3. Otherwise, the employer must “pursue a civil action to recover any unpaid debt from the employee.” Id. The DLSE also has opined that deductions cannot be taken from final wages, even with employee authorization. DLSE Opinion Letter 2008.11.25-1. While this opinion may be inconsistent with Barnhill, employers should use caution when recovering employee debts or overpayments at termination. 363 California State Employees’ Ass’n v. State of California, 198 Cal. App. 3d 374 (1988) (salary deductions to recoup prior overpayments violated attachment and garnishment laws). 364 DLSE Opinion Letter 2008.11.25 at 4. 365 See Lab. Code § 224. 366 See, e.g., Roman v. Jan-Pro Franchising Int’l, Inc., 342 F.R.D. 274 (N.D. Cal. 2022). 367 Lab. Code § 2802. 368 Lab. Code § 2802(c). 369 Lab. Code § 2802(b). 370 BLACKS LAW DICTIONARY 342 (2d pocket ed. 2001). 371 E.g., DLSE Opinion Letter 2001.03.19 (section 2802 requires reimbursement of client entertainment expenses where entertainment encouraged by employer); DLSE Opinion Letter 1998.11.05 (section 2802 requires reimbursement of mandated auto insurance premiums above statutory minimum); DLSE Opinion Letter 1993.02.22-3 (section 2802 requires reimbursement for actual cost of operating employee’s vehicle in the course of employment). 372 Gattuso v. Harte-Hank Shoppers, Inc., 35 Cal. Rptr. 3d 260 (2005), review granted, No. S139555 (Cal. Feb. 22, 2007). 373 Gattuso v. Harte-Hank Shoppers, Inc., 42 Cal. 4th 554 (2007). 374 Id. at 560 n.3 (“In the trial court, Harte-Hanks argued in the alternative that section 2802 did not require employers to reimburse employees ‘for routine expenses of employment such as car expenses,’ but only for losses caused by third parties. Both the trial court and the Court of Appeal rejected that argument, and Harte-Hanks does not assert it in this court. Accordingly, we do not address it here.”). 375 42 Cal. 4th at 568-71, 574. 376 Id. at 570-71. 377 Id. at 574 n.6, 575-76. 378 Estrada v. FedEx Ground Package Sys., Inc., 154 Cal. App. 4th 1 (2007). 379 Stuart v. RadioShack, 2009 U.S. Dist. LEXIS 57963 (N.D. Cal. June 25, 2009) (Judge Chen). 380 Cochran v. Schwan’s Home Serv., Inc., 228 Cal. App. 4th 1137 (2014). 381 Id. at 1144. 382 Townley v. BJ’s Rests., Inc., 37 Cal. App. 5th 179 (2019). 383 Oliver v. Konica Minolta Bus. Sols. U.S.A., Inc., 51 Cal. App. 5th 1 (2020) (“Defendant concedes that if service technicians are owed wages for their commute time, then they are also owed reimbursement for commuting mileage under section 2802.”). 384 See, e.g., Morel v. HTNB Corp., 2022 WL 17170944, at *4 (S.D. Cal. Nov. 21, 2022) (granting employer’s motion to dismiss section 2802 claim with leave to amend; “[the plaintiff] fails to allege if or how he and the putative class members were required to use phones, data plans, or internet access that were not provided by the company, or how [the employer] required him or the putative class members to incur expenses related to home office space, mortgage or rent, property taxes, homeowner's insurance, and utilities. For example, if [the employee] could have used company provided phones, data plans, or internet access, then [the employee’s] choice to use a personal phone, data plan, or internet access may have been unreasonable.”). 385 Williams v. Amazon.com Servs. LLC, 2023 WL 2396330, *2 (N.D. Cal. March 7, 2023). 386 Thai v. Int'l Bus. Machines Corp., 93 Cal. App. 5th 364, 372 (2023), review denied (Oct. 11, 2023). 387 Hess v. United Parcel Serv., Inc., 2021 WL 1700162, at *5 (N.D. Cal. Apr. 29, 2021).
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