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Obtain written OK for wage deductions

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in Compensation and Benefits,Human Resources

Q. Our company allows employees to purchase products on an installment basis. When employees quit and haven't yet paid the full amount, can we deduct the remainder due from their last paycheck? Do we need to get something signed before we make the deduction? —K.M., Pennsylvania

A. Check your state law on this one. In many states, including Pennsylvania, employers can make deductions from employees' wages only after the employee signs a written authorization. You should obtain such authorizations before making any deductions for health insurance premiums, loan repayments, union dues and the installment payment that you described. Employers violating written deduction laws can face civil and criminal liability.

Note: Even with a signed authorization, you can't make wage deductions that reduce the employee's wages below the minimum wage.  

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