Read through terms and conditions prior to signing with any writing company. Just like work and employment contracts in regular desk jobs, it is imperative that you are fully aware of what comes with the work that you are planning to enter. Of course, this shouldn't even be a discussion as it is quite common sense (at least from my point of view).
Furthermore, I do not think that penalties are necessarily bad. However, you have to be cautious of the extent of these penalties. As an academic writer, I have worked with companies that I believe had unfair penalties. For instance, I remember that I had a paper marked as poor quality. They decided to not pay me
at all for the work that I have provided. Because this was a ten-page paper, I was infuriated to say the least. When I asked for a detailed feedback on the essay I had written, they simply did not give any reason. I left that company a few days after, realizing that there has to be something better waiting for me.
Not even two weeks after, I passed a screening test for another company. I have now been working with them for a year. They have never done such a thing to me. When editors gave me feedback on my writing, they were detailed as to what I needed to improve on. They explained things thoroughly. Never had they ever taken 100% of my pay from a single project. The most penalty I had gotten was a few dollars from something that I knew was my mistake. I definitely believe that these are the type of companies that writers should be looking for.
Remember that you are still a freelancer for them, that you deserve to be treated humanely. Working for 12 hours straight on a single project only to have the pay stripped from you is definitely a red flag that writers should be cautious of. Penalties are alright for as long as they are not aimed towards taking advantage of new writers.