When employees are late to work, employers technically can deduct some money from their pay. However, the law says that this deduction must be fair and based on the time they actually missed. For example, if an employee is 35 minutes late, the employer can only take out 35 minutes' worth of pay.
This just means that an employer does not have to pay an employee for time that the employee did not work. In a way it may be helpful to not think of it as a deduction from wages because employers generally still cannot take a deduction from earned wages for hours an employee worked. Under the example above, an employee scheduled to work 8 hours that starts work 35 minutes late would only work 7 hours and 25 minutes and be entitled to wages for the full 7 hours and 25 minutes worked. The 35 minutes of pay deducted from the 8 hours is just 35 minutes the employee didn’t work or earn anyways, and thus there is no deduction from earned wages.
There is one small exception. If someone is less than 30 minutes late, even just a little late, like 5 minutes, the employer can still take out up to 30 minutes' worth of pay. This strange rule might encourage people who are going to be a little late to go ahead and show up 30 minutes late if for example the employer has a tardy wage deduction policy that makes the pay deduction the same 30 minutes for an employee who is 1 minute or 30 minutes late. However, most employers don't take advantage of California’s allowance to deduct wages for late employees because it might lead to more tardiness. Instead, many workplaces have their own policies to encourage workers to arrive on time, while still being fair about small delays. Finally, please note that the wage deduction rules in this article do not apply to salary exempt employees.
(See Link(s): Labor Code Sections 2928)