When money can be deducted from a paycheck

On Behalf of | Dec 3, 2014 | Wage And Hour Laws |

Indiana state law places limits on what can be deducted from an employee’s paycheck. For instance, if an employee is fined or otherwise owes the employer money, no funds may be deducted from that employee’s paycheck. However, it may be possible to ask for the money after he or she receives a full paycheck, and the employee may be terminated if he or she fails to repay any money owed.

There may be limits as to when money can be deducted in a valid manner from an employee’s paycheck. For instance, it may only be allowable to deduct money to pay for insurance premiums or to purchase stock or other company securities. It may also be possible to deduct money from an employee’s paycheck for the purpose of donating that money to charity.

Employees who are overpaid during a given pay period may have money deducted from their paychecks. However, employers must provide advance notice and can only take out a certain amount of money per check. Generally, an employer must get a written acknowledgement of the deduction from the employee. Furthermore, the employee may be able to revoke the reduction agreement with written permission from the employer.

An employee who has been paid less than owed may wish to pursue legal action against the employer. It may be possible to get the money. It may also be possible to win compensation for lost wages if an employee is terminated due to contesting a possible illegal deduction. An employment attorney may be able to help an employee pursue such legal actions.

Source: Indiana Department of Labor, “Wage & Hour FAQs“, November 21, 2014


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