Is it against the law to withhold earnings for lost or stolen company property from an employee and if so where can I find it in the Labor Code?

It is against California law to withhold money for such items unless the missing equipment was caused by the employee's negligence. However, this deduction is a risky move on the part of employer's. Refer to http://www.dir.ca.gov/dlse/FAQ_Deductions.htm for more information.