Quote Quoting adjusterjack
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I've lived in AZ for over 40 years and I've never heard of any laws prohibiting the practice you describe. However, your daughter would be wise to run this by the AZ Dept of Labor or an employment law attorney.

Meantime, I make the following observations:



Those limitations should be in a written document with signed acceptance by the employees.



You must include a specific statement by the employee that the employee consents to the penalty being deducted from pay. Otherwise you cannot deduct from pay. And regardless of how many deductions you still must pay minimum wage.



No good. Warnings should be in writing even if they don't result in the financial penalty. That precludes any argument "You never told me." And there is a written record of the warnings. Warnings should be signed by the employee that the employee acknowledges receipt of the warning.



There should also be a limit to how many financial penalties are imposed before an employee is terminated for misconduct. Your daughter should study up on misconduct as it's defined for unemployment compensation because misconduct will make an employee ineligible for unemployment compensation.

It's not a good idea to retain misbehaving employees too long.



That's nice. But it's irrelevant with regard to the penalty practice itself.
The bolded is really important. It would be seriously illegal to pay someone less than minimum wage and if a penalty or penalties were to take them below minimum wage you could get seriously dinged for that. Its also a big no-no to take money out of someone's pay without their written consent.

Also, when you consult with the employment law attorney you might want to ask whether or not you can fire someone for refusing to give written consent for deducting money from their pay.

On a purely personal note, I am not sure that prohibiting employees from having non-business conversations with potential customers is all that wise, PR wise. That type of friendliness can be what gets a kiosk noticed and can bring people back when they want to buy what you sell.