Can we deduct money owed from employee’s last paycheck? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Can we deduct money owed from employee’s last paycheck?

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Q. An employee of ours owes the company about $450. He rented a car using our company charge card and never repaid us. Now he has submitted a resignation letter. Can we deduct the $450 from his final pay?

A. No. Like most states, New York has a law governing deduction from wages. Specifically, New York Labor Law Section 193 prohibits any deduction from the wages of an employee except when made in accordance with the provisions of any law, rule or regulation issued by a government agency or expressly authorized in writing by the employee for his or her benefit.

Examples of deductions “for the benefit of an employee” include union dues and insurance contributions. Here, there is no indication that the employee has signed a written authorization.

This deduction needs to be further explored to determine whether it will be considered for the benefit of the employee under Section 193. The New York State Department of Labor generally takes a very narrow interpretation of this law.

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