My employer withholds overitme pay in lieu of cash drawer shortages. For example: I may have 5 hours of overtime pay coming in a pay period, but if I was short on my drawer, my employer will withhold overtime hours equivalent to the shortages. My check stub will not even show the actual overtime hours worked (as if I never worked them at all). They have done this without my consent or my knowledge. This effects my W-2 totals, etc., right? Is this legal. I never signed anything at the time I was hired, or since, authorizing,or acknowledging that there would be any such deductions for shortages. We are not "allowed" to balance our own drawers and are not present when they are being reconciled. We are/were verbally and in writing told that we will be terminated for counting our drawers.

This is complicated. AZ is not my state, and I have no idea what rules (if any) AZ has on this subject. This answer will be directed at federal rules only. And the federal rules (see webpointer below) are very poorly written. The actual regulations (in the 29 CFR 531.xxx range) are if anything even more confusing then the fact sheet.

http://www.dol.gov/esa/regs/compliance/whd/whdfs16.htm

Very basically.
- The employer is wrong to mess around with gross wages. All wages earned need to be recorded and taxed. They have not even a small excuse for their current handling.
- HOWEVER, federal law may indeed support net pay reductions for cash drawer shortages. There are restrictions, very specially that the reduction cannot come out of either minimum wage or overtime. The recovery however can come out of any base wages in excess of minimum wage (under the federal rules).
- There are no federal rules that I am aware of that gives the employee the right to count their own cash drawer. Arguably there is also no law which prevents the employer from terminating the employee for counting their own cash drawer (or not counting their cash drawer or being born in a month with a "R" in it). Employment At Will means that pretty much any employer can terminate pretty much any employee for any reason that is not actually against the law.
- AZ state law (if any) says whatever it says on this subject, but someone else will have to tell you what that is.

Az. law on payroll deductions: Employers may not withhold or divert any portion of employee wages unless (1) required or empowered to do so by law, (2) the employer has prior written authorization from an employee, or (3) there exists a reasonable good faith dispute as to the amount of wages due. An employer who deducts or withholds wages w/o a good faith dispute may be liable for treble the amt. of unpaid wages.