Q. As part of our new employees' noncompete contracts, we've started including a clause that requires employees to repay the company (through
A. Here's a good rule of thumb for all employers: If you think a payroll deduction sounds illegal, it probably is. shouldn't be viewed as a substitute for discipline. And they certainly shouldn't be used to “stick it” to departing employees.
It's a pretty safe bet that this payroll deduction plan would violate federal and state wage-and-hour laws. As a practical matter, whenever you make atypical payroll deductions from an employee's final pay, you're inviting trouble.
One more thought to chew on: Why do you have all new employees sign noncompete agreements? Those agreements are usually appropriate only for managers, sales reps and other high-level personnel with access to confidential information.