The United States Department of Labor (“DOL”) has announced that Viza Wash LLP, a San Antonio car wash, has agreed to pay $246,438 in unpaid minimum wages and overtime pay.  The DOL investigated the car wash between November 2008 and November and 2010, and found that, among other violations, it had made illegal deductions from employees’ paychecks for items such as uniforms, insurance claims, and cash register shortages.  As a result of these deductions, the employees’ pay fell below the required federal minimum wage.

This settlement provides yet another reason for employers to be concerned about docking employees’ paychecks, i.e. a potential minimum wage violation.  As discussed in an earlier entry, numerous states have laws specifically prohibiting deductions from employees’ wages in the event of cash shortages, loss of equipment, misconduct, the destruction of company property, and various other occurrences.  Additionally, the DOL has provided that docking an individual’s pay can result in the loss of an employee’s exempt status.

In light of these concerns, employers are best served by maintaining a policy of disciplining, rather than docking, employees who are responsible for loss, damage to company property, or for violating company policy.  Employers should consider that the potential liability for: (1) a failure to pay minimum wage; (2) a violation of state wage and hour law; or (3) the loss of an employee’s exempt status will likely far outweigh the cost of any lost or damaged company property.