Tread Lightly When Deducting from Employee Wages
Aug 7, 2023
Rachel Guin, Partner

Indiana Code allows for 18 very specific circumstances in which an employer can deduct wages from an employee’s paycheck. If an employer and the employee come to an agreement with regard to one of the permissible deductions, the employee must consent to the deduction, in writing, and it must be revocable at any time. This is referred to as a wage assignment.

A few examples of permissible assignments are uniforms, the purchase of tools or equipment to allow an employee to do their job, a payroll advance, and/or charitable contributions. However, keep in mind the amount of assignments. At no time (including a final paycheck) may an employer deduct more than 25% of the employee’s disposable earnings for that week, or the amount by which the employee’s disposable earnings for that week exceed 30-times the federal minimum hourly wage rate.

It’s very important to know and understand what is not included on the list of permissible assignments: damage to company property, failure to return company property and theft of company property – even if the employee agrees in writing as discussed above.

To recover stolen (unreturned) property, employers should contact law enforcement and, if they choose, file a lawsuit against the employee. Employers who unlawfully deduct wages may be subject to treble damages and will almost certainly be forced to pay the employee’s attorney’s fees and costs. 

Rothberg Law Firm

Phone: (260) 422-9454


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