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EMPLOYEES ARE NOT RESPONSIBLE FOR THEFT

Another tragic death involving a gas station attendant occurred recently in Ontario. For B.C. residents, it was a grim reminder of events in 2008 which led to our so-called “Grant’s Law” (requiring pre-payment for gas purchases).

The C.B.C. reported that Jayesh Prajapati, 44, was killed after a motorist filled up his SUV with $112 worth of gas and allegedly left the Shell station without paying. Prajapati was run over and killed by the fleeing motorist.

Mr. Prajapati’s widow said he’d been forced to pay for stolen gas before, though the owner of the station where Prajapati worked says his staff do not have to pay for stolen gas. Whether Prajapati pursued the motorist out of a fear of having to pay for the stolen gas himself is, of course, unknown.

One way in which some employers indirectly pressure employees to put themselves at risk to protect company property is by deducting the costs of theft from wages. This is quite plainly an unlawful practice in British Columbia.

The B.C. Employment Standards Act restricts the range of permissible payroll deductions. Aside from the so-called statutory deductions (income tax, Canada Pension Plan premiums, and Employment Insurance premiums), the range of permissible deductions is very narrow.

All wage deductions must be permitted by the Act or by some other statute of B.C. or Canada. Any other unauthorized deduction from wages is prohibited unless it is expressly approved by the Director of Employment Standards.

The Act lists the types of permissible deductions. They include deductions which are required by any statute of B.C. or Canada. The employer also must make deductions, in limited circumstances, when the employee has made a written “assignment” of wages (the employee’s written direction authorizing a deduction or payment).

These include assignments to a trade union and to a charitable organization or pension plan if the amounts are deductible for income tax purposes under the Income Tax Act. Other permissible assignments can address a family maintenance obligation and for the purpose of payments to an insurance company for medical coverage.

An employee may also request that an employer honour an assignment of wages to satisfy a credit obligation. To be valid, an assignment of wages must be written, it must be specific, and it must be given voluntarily. Blanket authorizations imposed by the employer and allowing it to make deductions for non-specific future events (such as possible thefts) would surely be invalid.

The key really is that the sections of the Act permitting written assignments of wages contemplate payments to third parties, not to the employer. In some circumstances, the employer will be allowed to recover a legitimate debt from the employee by way of an assignment of wages.

But employers cannot take deductions from wages for the purpose of paying any of their own costs of doing business. An employee must not be asked to pay any costs related to damage, breakage, or loss. They are also not required to pay for special clothing such as uniforms (including cleaning).

The Employment Standards Branch has disallowed deductions, amounting to a payment of the employer’s business costs, in a range of instances. These include costs of car accidents involving the employer’s vehicle, withholding of wages pending the return of company property, cellular telephone accounts, speeding tickets, air travel, and training courses for business purposes.

The Branch has also disallowed deductions for work-related credit card bills, recovery of customers’ bad debts, correcting alleged work deficiencies of the employee, damage to customers’ property, and fines incurred by employees while working.

The employer must not deduct wages to recover the costs of theft of its assets. This is true even when it is the employee herself who is suspected of the theft (the employer must, instead, avail itself of the courts and the normal remedies available to creditors seeking repayment).

Employers in B.C. who deduct wages from employees to recover the cost of stolen items are making two serious errors.

First, they are breaching their legal obligations under the Act. Now that fines are mandatory for B.C. employers breaching the Act, this could well prove to be a costly exercise.

Second, they are placing an indirect pressure on their employees to place themselves at risk to protect the employer’s assets. That not only puts employees’ lives in danger but it also creates an extraordinary risk of liability for the employer in the event of a tragic result.

Robert Smithson is a labour and employment lawyer, and operates Smithson Employment Law in Kelowna. For more information about his practice, or to subscribe to You Work Here, visit www.smithsonlaw.ca. This subject matter is provided for general informational purposes only and is not intended as legal advice.