Employers: Take care when recovering overpayments, debt from employees
There are three broad categories of deductions employers make from employee paychecks. The first, legally required deductions, comes in the form of income tax and wage garnishments. The second, deductions on employees’ behalf, is withholdings for insurance premiums or charitable contributions. The third category—and the focus of this column—is deductions for the employer’s benefit. Employers may seek to take deductions for overpayment, employee theft, or docking for cash shortages and breakage. When doing so, you must follow both federal and state law to avoid possible penalties and liquidated damages.
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