When an employer can make deductions from a paycheck

On Behalf of | Jan 13, 2015 | Wage And Hour Laws |

Workers in Indiana may want to find out when an employer is legally permitted to make deductions from a paycheck. There are some circumstances when an employer can make a deduction, but the employer must let the employee know about the deduction ahead of time. An agreement about the deduction must also be made in writing, and the agreement must be signed by both he employee and the employer.

Many employees are required to wear uniforms at their job, and employers are not permitted to deduct the cost of mandatory uniforms from paychecks. If the uniform is optional, the cost of the uniform can be deducted if the employee requests it. An employer is also allowed to deduct money from a paycheck if an employee was previously overpaid. Deductions for things like premiums on an insurance policy, labor union dues and stock purchases are also allowed with the employee’s written permission.

Employers are not permitted to fine employees by making deductions from their paycheck. However, an employer may seek repayment for property damage, loans made to an employee or goods and services given to an employee. If an employee fails to pay off these kinds of debts to their employer, the employer may file a lawsuit against the employee or fire them.

There are cases where an employer that disregards legal standards might make unlawful deductions from an employee’s paycheck. An employee who has been paid less than they were owed might want to speak with an attorney who has experience in employment law matters about the process involved in filing an unpaid wage claim.

Source: Indiana Department of Labor, “Wage & Hour FAQs,” Accessed on Jan. 9,


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