This is one of the most common questions I receive from clients who provide company vehicles is whether they can deduct speeding tickets from an employee’s paycheck. While it may seem like a reasonable way to hold employees accountable for traffic violations, the reality is that doing so can create significant legal complications.
Wage Deduction Laws: What Employers Need to Know
Employers must be cautious when making deductions from employee wages, as both federal and state laws strictly regulate what is permissible. The Fair Labor Standards Act (FLSA) outlines limited instances in which deductions can be made, such as for taxes, benefit contributions, and court-ordered garnishments. However, deductions that primarily benefit the employer—such as fines related to the employer’s cost of doing business—can create legal risk.
A speeding ticket received while an employee is operating a company vehicle is typically considered part of the “cost of doing business” for the employer. Even if an employee is clearly at fault for the violation, the employer may still bear ultimate responsibility for fines associated with a vehicle registered in the company’s name.
This concept is like vicarious liability, where an employer can be held legally responsible for the actions of their employees if those actions occur within the scope of their job duties. Even if the employee is fully responsible for the incident, the employer may still find themselves on the hook for fines, civil penalties, or even in court—particularly if the violation results in an accident or injury.
Additionally, deductions for speeding tickets could violate the FLSA if they reduce an employee’s hourly pay below minimum wage or cause an exempt employee to fall below the salary basis threshold. This can lead to wage and hour disputes, penalties, and potential legal claims.
State Laws and Written Consent
While the FLSA sets a baseline for wage deductions, state laws vary on what employers can and cannot deduct from wages. Many states, including Louisiana, prohibit deductions that primarily benefit the employer, even with employee consent.
It’s always best to consult state-specific labor laws before implementing any wage deductions. Even if an employee agrees in writing to have ticket costs deducted, it may still be considered unlawful under certain state regulations.
Alternatives to Wage Deductions
Fear not, you do have options when it comes to addressing employee speeding violations in company vehicles. Rather than relying on wage deductions, businesses should consider updating company policies and implementing clear disciplinary measures to hold employees accountable.
A well-crafted vehicle use policy should include:
- A clear expectation that employees must follow all traffic laws while operating company vehicles.
- A disciplinary process for violations, such as written warnings, loss of company vehicle privileges, or suspension.
- Potential financial responsibility for fines paid directly by the employee rather than through wage deductions.
- Guidelines for how repeat offenses will be handled to ensure consistent enforcement.
Consistently enforcing these policies can address the issue effectively while avoiding legal risks associated with wage deductions.
The Bottom Line
While one may think that deducting speeding tickets from an employee’s paycheck is a straightforward solution, it is fraught with legal risks under both federal and state wage laws.
Employers should instead focus on proactive policies and disciplinary measures to ensure compliance with company vehicles. By clearly outlining expectations and holding employees accountable through these policies, businesses can protect themselves legally while maintaining fairness in the workplace.
If you are not sure whether your organization is acting compliantly, then reach out to us at empact hr before implementing any payroll deductions or policy changes.
