By: Chris M. Mason and Daniel Peabody, Jennings Strouss
“Employers should regularly re-evaluate their practices for withholding pay from employee wages. Withholdings mandated by federal and state law, such as for taxes and garnishments, pose little risk to an employer. For many voluntary deductions, such as healthcare and retirement benefits, employees typically provide the necessary written consent. But, what many employers may not realize is that deductions from wages for many other reasons, such as for business-related expenses, recoupment for lost or damaged equipment, policy violation penalties, or repayment of employee loans, may violate federal or state law.
The principal law that employers must consider, the Arizona Wage Enactment, requires employers to timely pay employees all wages due, but permits employers to make limited withholdings from pay. Included among these are withholdings authorized in writing by the employee. Thus, employers should always secure written agreements from their employees when making these types of withholdings. ”
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