Employers and Paycheck Deductions2019-05-15T13:59:55-05:00

Can an employer deduct money from an employee’s paycheck?

Illinois law severely restricts when an employer can deduct money from an employee’s paycheck, even if the employee owes property or money to the employer. We’ve broken down the law for you, but the Illinois Department of Labor provides a nice summary of the rules and frequently asked questions here.

 

The gist

In general, deductions from an employee’s pay can only be made:

  • When required by law (such as taxes);
  • When it benefits the employee (such as health insurance premiums, union dues, etc.)
  • To comply with a valid wage assignment or wage deduction order (such as automatic child support or maintenance payments)
  • With the express written consent of the employee, given when the deduction is made.

This issue often comes up when an employer has terminated an employee, and the employee has yet to return some property of the employer (such as keys, building access cards, laptops, etc.) The specific law (820 ILCS 115/9) states:

“In no case shall an employer withhold all or part of the final compensation due an employee while the employer awaits return of property in the possession of the employee unless the employee’s express written consent is given freely at the time the deduction is made.”

Employers are also barred from deducting money from an employee’s paycheck for cash or inventory shortages, or for equipment or property damages (unless, of course, the employee gives written consent when the deduction is made).

 

How much can an employer deduct?

Even when a deduction is allowed, the law caps the amount that an employer can legally withhold. Employers are limited to the lesser of the following amounts::

  1. 15% of your gross wages; or
  2. The amount of disposable income (or the federal minimum wage if it’s greater than the Illinois minimum wage) multiplied by 45. In other words, the state cannot leave the employee with less than 45 times the state minimum wage as weekly take-home pay.

This law often becomes relevant when a creditor is enforcing a valid judgment against a person. In such a case, the creditor can force the debtor’s employer to withhold wages from their paycheck, but the withheld wages cannot exceed these limits.

 

As with any area of the law, there are nuances that all employers should be aware of. G & G Law can help! Contact us today.

 

Find This Helpful? Other Readers Also Liked…

  1. Employees vs. Independent Contractors
  2. Unpaid Interns
  3. IDES Claims
  4. Creating Employee Handbooks – Some Dos and Don’ts
  5. Creating Employee Handbooks – A List of Possible Sections