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Equipment

Legal Warning: In New Jersey, you cannot simply deduct the cost of broken equipment from an employee's paycheck.

New Jersey law is very strict and employee-protective on this matter. The state's Wage Payment Law prohibits employers from making deductions for "breakage, spillage, and cash register shortages" from an employee's wages. This is because the law considers these to be a regular cost of doing business.

Trying to enforce a "you break it, you pay for it" clause by deducting from wages would likely be considered an illegal deduction, and the employee could file a wage claim with the New Jersey Department of Labor. This could lead to back-pay owed, fines, and other penalties.

Why This Clause is Not Advisable​

  • Illegal Wage Deductions: The primary reason is that New Jersey law does not permit this type of deduction from an employee's paycheck, even if the employee has signed a contract agreeing to it.
  • Discrimination: Enforcing this selectively or inconsistently could lead to claims of discrimination.
  • Poor Morale: This kind of policy can create a culture of fear and mistrust, where employees are afraid of making honest mistakes. This can stifle productivity and innovation.

How to Address the Issue Legally​

Instead of a "you break it, you pay for it" clause, a more legally sound and practical approach is to focus on a clause about the duty of care and the consequences of gross negligence or intentional damage.

Important points about this alternative clause:

  • It distinguishes between honest mistakes and intentional acts.
  • It explicitly states that recovery will not be made through an illegal wage deduction.
  • It focuses on the employee's responsibility to use care and report incidents, which is a legitimate business expectation.

Final Legal Disclaimer: Consult with a New Jersey employment law attorney to draft and review any employee contract clauses. The information provided here is for general guidance and does not constitute legal advice. New Jersey law on wage deductions is complex and an improperly drafted clause could expose your business to legal liability.