Dear HR,
I recently terminated an employee. I personally loaned the employee $500, of which $300 is still owed. Can I deduct the balance owed from the final paycheck?
Answer:
An Employer may make a deduction from a final paycheck for a cash loan to an employee ONLY IF the employee has voluntarily signed a loan agreement, and the loan was for the employee’s sole benefit.
The deduction may not exceed 25{0c2d428c3cefef4a77c472786cabf3d957ca1c1fde265c02f19cd1ec2d7db907} of the employee’s disposable earning* OR the amount of disposable earning in excess of $218 per week whichever is less.
*Disposable earnings are generally net earning after tax deductions and family support withholdings.
ASK HR is based on true stories intended for educational purposes. As almost every workplace is different, we advise you to talk with a Cardinal representative about your situation.