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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.
Under North Carolina law, an employer may only withhold or deduct from an employee’s wages under the following conditions:
(1) The employer is required or empowered to do so by State or federal law;
(2) When the amount or rate of the proposed deduction is known and agreed upon in advance, the employer must have written authorization from the employee which
(3) When the amount of the proposed deduction is not known and agreed upon in advance, the employer must have written authorization from the employee which is signed on or before the payday(s) for the pay period(s) from which the deduction is to be made, and indicates the reason for the deduction.
Prior to any deductions being made, the employee must:
(4) An employer may withhold or divert a portion of an employee's wages for cash shortages, inventory shortages, or loss or damage to an employer's property after giving the employee written notice of the amount to be deducted seven days prior to the payday on which the deduction is to be made, except that when a separation occurs the seven-day notice is not required.
(5) An overpayment of wages to an employee as a result of a miscalculation or other bona fide error, advances of wages to an employee or to a third party at the employee's request, and the principal amount of loans made by an employer to an employee are considered prepayment of wages and may be withheld or deducted from an employee's wages. Deductions for interest and other charges related to loans by an employer to an employee require written authorization, however.
(6) The withholding or diversion of wages owed for the employer's benefit must comply with the following requirements:
For further details and examples of agreements, see the state website at:
Contact
North Carolina Department of Labor
Regulations
Wage and Hour Act
NC General Statute – Chapter 95, Article 2A – Withholding of wages (§95-25.8)
http://www.ncga.state.nc.us/EnactedLegislation/Statutes/HTML/BySection/Chapter_95/GS_95-25.8.html
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