Can An Employer Deduct Rent From Wages?

Employers can deduct housing rent, such as for an apartment, from wages in California, which also may be referred to as lodging credit.  This type of arrangement occurs often with property managers, residential managers, and site managers.  

However, California has some very specific rules and limits on employers paying employees in the form of housing to meet minimum wage.  For example, employers with 25 or fewer employees may not credit or deduct more than two thirds (2/3) the regular rental value, and no more than $621.28 per month as of January 1, 2019.  That will go up to $677.75 per month beginning January 1, 2020 and will likely continue to increase after that as California updates its regulations. 

The limits would be different for employers who employ 26 or more employers or if multiple employees have deductions for sharing the lodging.  Finally, employees must voluntarily agree with employers in writing that the rent can be deducted from wages to meet California’s minimum wage requirements for the procedure to be valid. 

(See Link(s): Industrial Welfare Commission Wage Orders)