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Deducting cost of intentional damage from former employee’s final paycheck

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in Compensation and Benefits,Employee Benefits Program,Human Resources

Q. We fired an employee for destroying company property. The manager wants to deduct the value of the damaged property ($2,500) from the employee’s final paycheck (approximately $2,700). I don’t think we can take so much from the employee’s final paycheck.

A. You are correct; you cannot make the deduction. The Michigan Wage and Fringe Benefits Act (MWFBA) prohibits an employer from making a deduction from an employee’s paycheck without written consent from the employee “for each wage payment subject to the deduction.” (There are certain exceptions to this rule, but they do not apply when the employer is seeking to recover damages or a debt from its employee.)

The MWFBA also states that the cumulative amount of any deductions, even assuming the employee has agreed in writing, shall not reduce the gross wages paid to a rate less than the minimum wage.

Here, the deduction is impermissible because the employee did not authorize the deduction. The deduction also is impermissible because it would reduce the employee’s wages for the pay period below minimum wage.

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