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Labor Code section 224224 allows an employer to deduct from wages where the deduction is required or where the employer is empowered to do so by federal or state law. This includes automatic 401(k) payroll deductions under certain circumstances.1
Under federal law, employers can make an automatic deduction from an employee's pay for 401(k) contributions unless the employee opted out in writing.
For a 401(k) plan to qualify as an automatic contribution arrangement under federal law, your plan must meet federal statutory requirements. These requirements include specified features to ensure that the plan provides for automatic deferral of compensation, matching or nonelective employer contributions, and specific notice to employees about the automatic contribution, including the right to choose to receive cash payment.
1. DLSE Enforcement Policies and Interpretations Manual sec. 11.1.1.1, 11.1.1.2