©2023 Seyfarth Shaw LLP www.seyfarth.com 2023 Cal-Peculiarities | 237 The Supreme Court upheld this provision in Kerr’s Catering Service v. Department of Industrial Relations,332 deciding that employers cannot make payroll deductions that would make employees financially responsible for business losses that did not result from the employees’ gross negligence or willful misconduct. The employees at issue sold food from lunch trucks. They earned wages plus a commission based on their sales, with the commission reduced by any cash shortages. Kerr’s Catering upheld the Wage Order on the rationale that the concept of protecting employees from wage deductions already existed in various Labor Code provisions: section 221 forbids an employer to collect back from an employee wages already paid, and sections 400-410 limit employers’ rights to seek cash bonds from employees. Rule against business-expense deductions applied to exempt employees. The DLSE has opined that the Labor Code itself, rather than just section 8 of the Wage Orders, bars the deductions expressly barred by section 8. That DLSE interpretation would mean that the anti-deduction rules protect exempt employees as well as the nonexempt employees protected by the Wage Orders.333 Development of general concept. The concept stated in Kerr’s Catering—that California employers must not make employees insurers for general business losses—extends to other contexts, making certain commission and bonus plans suspect under California law (see §§ 7.15, 7.16). 7.12.2 Payment for uniforms California employers who require employees to wear uniforms must pay for the uniforms and their maintenance.334 A uniform is any distinctively designed or colored wearing apparel or accessory, although items of unspecified design that are usual and generally usable in the occupation (e.g., white shirts, dark pants, black shoes and belts) are not considered to be part of a uniform.335 In one case, a retailer settled a DLSE enforcement action in which the DLSE contended that a dress code requiring the wearing of a blue shirt and tan or khaki pants constituted a uniform requirement.336 Section 9(C) of most Wage Orders states that employer-provided uniforms must be returned by the employee upon completion of the job. The employer may require a reasonable deposit as security for the return, provided that the employer follows the specific requirements of Labor Code section 400, et seq. Pursuant to this process and with prior written authorization by the employee, the employer may deduct from the employee’s last check the cost of the uniforms, but must not deduct for normal wear and tear. 7.12.3 Payment for tools or equipment Section 9(B) of most Wage Orders provides that employers who require tools or equipment to perform a job must provide and maintain them, although employees who are paid at least twice the minimum wage may be required to provide and maintain hand tools and equipment customarily required in their trade or craft. Section 9(C) provides that with tools and equipment, as with uniforms, employers may require a reasonable deposit and may, with prior written authorization, make deductions for items not returned by employees. 7.12.4 Cost of medical examinations California employers must not deduct from a paycheck the cost of a medical examination for the employee.337 7.12.5 Debt repayment (employee loans) Any payroll deduction used to satisfy a debt that the employee owes the employer is valid only if the deduction was approved in writing by the employee. Any deduction of a “balloon” payment from a final paycheck is unlawful.338
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