Can I Deduct Cash Drawer Shortages From an Employee Paycheck?
A hold harmless agreement is one in which one person agrees to assume the liability and risk that may arise from the obligation, and protects and indemnifies the other party against having to bear any loss. An indemnification or hold harmless agreement allows the other party to the contract to be reimbursed against loss or damage.
An employer may deduct the amount of cash shortages that are proven to be a result of theft or other misappropriation by the employee, even though such a deduction might take the employee below the minimum wage level; the employer bears the burden of proving that the employee was personally and directly responsible for the misappropriation (see Mayhue's Super Liquor Stores, Inc. v. Hodgson, 464 F.2d 1196 (5th Cir. 1972). Ordinary cash register shortages, losses of money due to ordinary negligence, and losses due to damage, destruction, or loss of equipment may not be deducted from the wages of employees to the extent that the deductions would take employees below minimum wage.
To avoid future disputes, such an agreement should be detailed about the procedures for determining when a drawer is short and any exceptions that may apply.