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Summary of differences between federal and state regulations
Federal regulations restrict the types of deductions that can be made from an employee’s wages or salary. Deductions can be made in certain cases, but the legality often depends on the nature and purpose of the deductions, as well as the status of the employee as exempt or non-exempt.
Illinois law extensively addresses wage deductions as outlined below.
Written agreement authorizing deductions
Any written agreement between employer and claimant permitting or authorizing deductions from wages must be given freely at the time the deduction is made. In the case of cash advances, the agreement may be made either at the time of the deduction or at the time of the advance itself. This generally means that if deductions will be taken from more than one paycheck, a separate authorization is needed for each paycheck.
As of August 22, 2014, the state regulations were revised toa allow a single authorization to be valid for more than one paycheck if the written agreement describes the time period, provides the same amount of deduction each period, and allows the employee to voluntary withdraw the authorization for the deduction. (300.720, Written Agreement Authorizing Deductions)
Cash or inventory shortages
Cash and/or inventory shortages shall not be deducted from an employee’s pay unless the employee’s express written consent is given freely at the time the deduction is made.
Cash advance repayment agreement
If a cash advance is to be repaid through payroll deductions, both the employer and the employee must sign an agreement specifying the amount of the advance, the repayment schedule, and the method of repayment.
Advanced vacation pay
If an employer permits an employee to take a vacation which has not yet been earned, and the employee resigns or is terminated, the employer may not deduct the unearned vacation pay from the employee’s final compensation without a written agreement as set forth in the rules pertaining to cash advances.
Tuition reimbursement
If an employer advances payment to or on behalf of the employee for the cost of tuition, textbooks and other expenses of voluntary elective educational courses, the employer may not deduct such advances from the employee’s wages or final compensation without a written agreement as set forth in the rules pertaining to cash advances.
Training and educational expenses
An employer shall not deduct expenses for training or educational courses required by the employer, even though such training or educational courses are also required by State or federal government, unless the employee’s express written consent is given freely at the time the deduction is made.
Cash advance exception
The provisions of these rules pertaining to cash advances shall not apply to funds transmitted by wire to employees who are traveling, if a signed authorization is not practicable.
Deduction limit
No cash advance repayment agreement shall provide for a repayment schedule of more than 15% of an employee’s gross wages per paycheck.
Balance due at termination
If, upon termination, an employee owes an amount greater than 15% of gross wages, that amount may be withheld from the employee’s final compensation, but only if such an arrangement was included in the agreement signed when the advance was made.
Damaged property
A financial loss suffered by an employer due to damage to his/her property or to that of a customer or client shall not be deducted from an employee’s pay unless the employee’s expressed written consent is given freely at the time the deduction is made.
Return of Employer’s Property
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.
Uniforms required by an employer
An employer shall not deduct the cost of purchasing and/or cleaning uniforms required by the employer from an employee’s wages or final compensation, unless the employee’s express written consent is given freely at the time the deduction is made. Distinctive outfits or accessories, or both, intended to identify the employee with a specific employer shall be considered a uniform. If an employer requires a general type of ordinary basic street clothing to be worn, but permits variations in the detail of dress, this shall not be considered a uniform. However, when an employer requires that an employee purchase street clothes either from the employer or from a third party designated by the employer, the clothing shall be considered a uniform.
Equipment required by an employer
An employer shall not deduct the cost of equipment required by the employer or by law from an employee’s wages or final compensation unless the employee’s express written consent is given freely at the time the deduction is made.
Medical examinations and records
No employer shall require any employee or applicant for employment to pay the cost of medical examinations or the cost of furnishing any records of such examinations which are required by the employer as a condition of employment.
Deposit
An employer may request that a deposit be paid on a particular piece of property, but such a deposit shall not be deducted from the employee’s wages or final compensation unless the employee’s express written consent is given freely at the time the deduction is made.
Conditions of return of deposit
A deposit must be returned to the employee, along with any final compensation, provided the employee has returned the property on which the deposit was paid.
Time for return of deposit
If property is returned after all other final compensation has been paid, the deposit on the property must be given to the employee immediately upon return of the property, if possible, but in no case later than the next payday.
Overpayment
When the employee agrees that an overpayment has been made, the entire sum of the overpayment may be deducted on the employee’s first regular payday subsequent to the payday on which the overpayment occurred. If an overpayment is not discovered until one or more paydays have passed, the employer and employee shall agree on a repayment schedule. If the employer and employee cannot agree on a repayment schedule, then the employer must comply with Section 9 of the Act and the rules herein (Subpart D) and treat the overpayment as a cash advance.
If the employee refuses to sign such an agreement or in any way disputes the amount of overpayment or the employer’s right to recoupment, no deduction shall be made unless the employer complies with the notice requirements enumerated in Section 9 of the Act and the rules herein (Subpart D).
Acceptance of disputed paycheck
Acceptance by an employee of a disputed paycheck will not be considered evidence that the employee has agreed to the deduction in question.
State
Contact
Regulations
Administrative Code Title 56: Labor And Employment
Chapter I: Department Of Labor
Subchapter B: Regulation Of Working Conditions
Part 300 Payment And Collection Of Wages Or Final Compensation
Subpart D: Deduction From Wages Or Final Compensation
www.ilga.gov/commission/jcar/admincode/056/05600300sections.html
Federal
Contact
Regulations
For non-exempt employees:
29 CFR Part 531, Wage Payments under The Fair Labor Standards Act of 1938
For exempt employees:
29 CFR Part 541, Subpart G, Salary Requirements