Barnhill
Barnhill v. Robert Saunders & Co.
Opinion
Opinion
Scott, J.
The principal question presented here is whether an employer has the right to set off an employee’s debt against wages due the employee upon the employee’s discharge. We also consider whether an employer who attempted to exercise such a setoff was properly subjected to penalties for wilful nonpayment of wages pursuant to Labor Code section 203.
Respondent Eileen Barnhill was employed by appellant Robert Saunders & Company as a bookkeeper from March 3, 1975, until December 12, 1977. In October 1977 she executed a promissory note in favor of appellant in the amount of $587.50 at 10 percent interest. On its face, the note states “To be paid by payroll deduction or on demand.” Subsequently, the parties orally agreed that appellant would deduct $37.50 from Barnhill’s wages every two weeks.
Barnhill was discharged on December 12, 1977, for reasons not relevant herein. On that date, the balance due on the note was $475 plus interest, and Barnhill was owed two weeks wages, or $475. When she went to pick up her check, she was given a stub with a net zero balance indicating various deductions including a $442.46 setoff against the balance owing on the note.