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Don’t make ex-Employees pay training costs

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. We’ve started requiring employees to repay the company (through payroll deduction) for training costs if they quit or are fired within one year. Are we OK legally? —S.M., Kentucky

A. Here’s a good rule of thumb for all employers: If you think a payroll deduction sounds illegal, it probably is. Payroll deductions 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 laws. As a practical matter, whenever you make atypical payroll deductions from an employee’s final paycheck, you’re inviting trouble.

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