Q. Our company has a program that reimburses employees for work-related educational programs. However, if the employee leaves the company within one year of the reimbursement payment, the employee must repay the company. Can we take this repayment out of the employee’s final paycheck?
A. Maybe. As a general rule, a payment due from an employee is an ordinary debt, creating a creditor-debtor relationship. In such a case, the company must pursue the employee-debtor just like other debtors do. It may not take money out of the employee’s paycheck.
However, the North Carolina Wage and Hour Act does allow wage withholding in certain situations. Assuming the amount paid for an educational program is a set dollar amount, the employee may execute a written authorization for wage withholding that details the monetary amount or percentage of wages to be deducted from one or more paychecks.
However, it is arguable that employee might have a reasonable opportunity to withdraw his or her authorization before the withholding occurs. If the written authorization does not refer to a specific dollar amount, then the company must give the employee advance notice of the specific amount of withholding sought and must give the employee an opportunity to withdraw his or her authorization prior to the withholding deduction. N.C.G.S. § 95-25.8 addresses wage withholding. Proper wage withholding may be difficult to accomplish in these circumstances.
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